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Cfrmal Britain by 
So** ZjUU, GuOdford and B*h*r 

Xo WALTER *WiuMKitx>mo 
Af*rch 23, 1937 


THIS book was written before the war. It was written in order 
to define the principles which may guide us in the ^postwar 

I began work upon it in the late summer of 1933 after I had 
attended the London Economic Conference. Sharp in my 
mind were the impressions I had received two years earlier, 
from watching the League of Nations attempt to deal with the 
Japanese seizure of Manchuria. With the failures at Geneva 
and at London and with the rise of Hitler, it was evident that 
the world was moving towards a gigantic* war. I completed 
the book in the early spring of 1937, that is to say after Hitler 
had reoccupied the Rhineland and just before the Japanese 
invasion of North China. 

The book, as the reader will see, is stamped with the realiza- 
tion that 

the dominant fact in the contemporary world 

is 'the return of the European and Asiatic 

great powers to the conception of total war [p. 149], 


Germany,, renascent under Nazi leadership, 
would . . . seek to annihilate all rival 
powers in Europe [pp. 148-149], 

and that in Russia 

the form of the political state, the plan 

of the economy, the determining policies 

of the regime, are what they are because Russia 

has been preparing for war on her European 

and on her Asiatic frontiers, [p. 88] 


Here and abroad, by the years 1935-1937, these observations 
were the common knowledge of so many officials and cor- 
respondents that they were not news, much less prophecy. 
But they were the axioms of any inquiry into the future. 

So there was little time left, I felt, to clear my mind and 
settle my own convictions before the tempest descending upon 
us must leave us so preoccupied with the terrible daily urgency 
of war that it would be difficult to think at all of the more 
permanent things. With that impulse this postwar book was 
composed in the closing days of the prewar era. 
' I wrote it, daring to believe that the causes of the coming 
war and the principles of the reconstruction to follow it were 
known. I do not mean that I could invent them, or could 
discover them; only that it was possible to find them and to 
know them. I had learned that in respect to political prin- 
ciple in our ancient civilization only the n^Tve think they can 
be original. For the enduring principles are enduring because 
they reflect a, very long experience. 

The first eight chapters of the book may now be tested by 
hindsight, and the reader will readily see where they were 
correct and where they were not. These eight chapters are 
an analytic criticism of the falsities that have animated the great 
reaction of our times j this reaction set in about 1 870 and it has 
doomed our generation to pass through the terrible ordeal of 
total wars and of revolutionary dictatorship. The remainder 
of the book is a constructive affirmation of % the principles to 
which, I believe, men must and will adhere when the reaction 
subsides and they resume the work, so often interrupted, of 
conserving and developing the civilization of which we are the 

The constructive portion of the book, which begins on page 
159, is built upon two affirmations. The first, and the more 
fundamental of the two, is that the politics, law, and morality of 


the Western world are an evolution from the religious convic- 
tion that all men are persons and that the human person is in- 
violable. "Towards this conviction men have fought their 
way in the long ascent out of the morass of barbarism. Upon 
this rock they have built the rude foundations of the Good 
Society." (p. 378) 

The second affirmation is that the industrial revolution 
"which still engages the whole of mankind and poses all the 
great social issues of the epoch in which we live, arises primarily 
from the increasing division of labor in ever-widening markets j 
the machine, the corporation, the concentration of economic 
control and mass production, are secondary phenomena." 
(p. 164) 

The central theme of the book is posed by these two affirma- 
tions: the problem, as I see it, is how to reconcile with the com- 
paratively new economy of the division of labor the great and 
ancient and progressive traditions of liberty embodied in laws 
which respect the human personality. The reader will find 
set out at length the argument as to why fascism, communism, 
state socialism, state capitalism, and nineteenth-century laissez- 
faire individualism, are incapable of reconciling the modern 
economy with our cultural heritage. In Chapters XI, XII, 
and XII I he will find what I believe to be the necessary prin- 
ciples of the reconciliation. 

Inasmuch as I rest my case upon old and tested truths, I do 
not feel that I am guilty of pride of opinion when I say that the 
experience through which we have passed since the book was 
first published has not shaken but has, in fact, strengthened 
my conviction that it contains more truth than error. Ob- 
viously, if I wrote the book today, I would change many things 
in it. I would, I hope, be able to spare the reader much trou- 
ble by shortening it. But the defects of the book must be 
attributed to the author; the truths which it expounds are the 



work of the masters of our civilization, and the reader must 
'not let the faults of the disciple too greatly disturb him. 

In the text and in the footnotes I have acknowledged the 
sources upon which I have drawn; there too will be found the 
teachers by whom I have been taught. 

W. L. 

September 6, 1943 


INTRODUCTION. . . . , . vii 



The active contenders for political power believe that hu- 
man ends must be attained by the coercive direction of the 
life and labor of the people. This is contrary to the as* 
sumption of the whole struggle for emancipation; Is the 
dogma a new revelation or a gigantic heresy? 



Coercive direction is supposed to be required by the ma* 
chine technology. This conclusion not self-evident. 
Coercive direction was practised long before the indus- 
trial revolution. It is the policy of the Ancien Regime. 
Authoritative direction is inconsistent with experimental 
science and technological progress. 


. Great corporate capitalism and monopoly are due not to 
technology but to laws. Large-scale production should 
not be confused with monopoly. Monopoly not favor* 
able to technological progress. Economic concentration 
is not a predestined development, as collectivists assume. 


The method of human progress is to liberate human en- 
ergy. This was the faith of the men who made the 
modern world. Is it now suddenly obsolete? The 
tragic choices of this generation. 




The current viiion of a directed society is based on a 
myth in which omniscience is married to omnipotence. 
In the unsettlement of the World War men dreamed of 
the union of science with political authority and de- 
manded experts who were autocrats. 


But the rulers of men are only men, and can do no more 
than ordinary men can do. In magnifying the function 
of the state as planner and director of man's destiny, the 
limitations of men have been forgotten. Roosevelt and 
Pericles. More efficient communication, but greater 
complexity in government. The quantum of political 
competence is limited and relatively fixed. Rulers can 
r (enow only a little. They can do only a few things. 


The whole social process is beyond any man's compre- 
hension. The routine of the planner's breakfast. Men 
cannot direct the social process. They can only intervene 
here and there. The intellectual apparatus of total so- 
cial control has never yet been invented. It would re- 
quire a logic more complex than any yet known to men. 


The more complex the interests that have to be regu- 
lated, the less possible it is to direct them by overhead 
authority. The immobility of great armies. Of great 
corporations. Of bureaucracies. The modern cry for 
protection, stabilization, and security a sign that organiza- 
tion is too elaborate for human direction. 


As organized .direction increases, the variety of human 
ends must be standardized into uniformity. The symp- 
toms -of reaction to a lower level of civilization. More 
organization and more disorder. More planning and 
more chaos. 


In this age men believe that there are no limits to man's 
capacity to govern others. The older faith was that 


progress was possible only u power WM limited to the 
capacity and virtue of mien. 


TIVISM , 45 

Before 1870 freedom was the criterion of reform. 
After 1870 collect! vim began to dominate western 
thought. Reasons for thinking that its ascendancy may 
be at its zenith. The quandary of contemporary in- 
tellectuals. On making the best of both worlds while 
living in a regime of liberty. The average humane col- 
lectivist. Spencer's prophecy. Collectivists have no 
stopping place short of the totalitarian rtate. 



They can never restore the right to dissent. Mussolini's 
conception of individualism. The regimental organiza- 
tion of humai^ beings. The problem of modern abso- 
lutists is how to overcome the diversity of human inter* 


The fascist theory that diversity is ultimately to be over- 
come by drilling the population. The national social- 
ist fiction of race. The attempt to recondition a modern 
nation. How is conformity in the mass to be reconciled 
with the principle of leadership? Only by re-creating 
a hereditary governing caste. But this re-creates the di- 
versity of interest* which fascism seeks to abolish. 


These are the paradoxes of the fascist theory. In prac- 
tice fascism is the total militarization of a people for a 
war of conquest. Fascist policy is simply the policy of 
modern nations when they go to war. 


Communism, too, seeb to eliminate diversity of inter- 
ests. In the doctrine this is to be achieved by public 


ownership of the meant of production. The class strag- 
gle to end all class struggles. How does socialism 
evolve? The naive conception of property. The so- 
cialist formula for administering public property. The 
communist formula. "Equal" rewards are required, but 
cannot be calculated. 


The mechanism of Russian communism. The pork 
barrel. Communism creates a new form of property 
public office. The struggle for wealth becomes a struggle 
for power. Stalin and Trotzky. 


Marxian theory does not explain the Russian regime nor 
guide its policies. Why was Russia the first supposedly 
socialist state? When Lenin was still a Marxist. His 
innocence. The Russian planned economy created by 
military necessity. The essential principles of the 
planned economy are not Marxist but militarist. 


All known examples of planned economy are military in 
origin and purpose. 




Why planning is necessary and feasible under war con- 
ditions. The moral climate. The general staff tells the 
planners what to plan for. But who is to tell them in 
time of peace? 


A planned economy must ration consumption. On plan- 
ning production in America. An economy planned for 
abundance is a meaningless conception. 


The planners must conscript labor or they cannot carry 
out their plan* 


4. FLAMMING vmmtw DSMOCKACT . . . . 103 


Since a planned economy must execute its plan, planning 
is incompatible with the continuous responsibility of the 
- government to the people. The people cannot make 
their own plan. The planners must control the people. 
A planned economy supposes a benevolent despotism. 
There is no way of planning to have benevolent despots. 




The majority of well-disposed persons to-day are gradual 
collectivists. They believe in the dictatorship of tran- 
sient majorities. But transient majorities cannot ad- 
minister Five- Year Plans. 


In practice gradual collectivism advances by concessions 
to pressure groups. The tariff. The Agricultural Ad- 
justment Act. Other examples. 



Gradual collectivism is the philosophy of special privi- 
leges for all. The corporative state. It can be regulated 
only by a dictator. Gradual collectivism arouses the ex- 
pectation of plenty provided by the coercive authority of 
the state; its measures restrict the production of wealth. 


The special privileges of gradual collectivism cannot be 
fairly or wisely dispensed by a democracy. The National 
Industrial Recovery Act. Special privilege is sought in 
order to obtain more income for less work. 

5. RISING EXPECTATIONS . . . . .127 

Collectivity have taught the people to think that they 
can be enriched by political power. Thus the more 
powerful the government the richer the people. This 
is an optical illusion. The "treasure" of the Duchy of 


6. THE STRUGGLE FO* POWER . . . .130 


By encouraging the belief that political power can enrich 
the people, and by impoverishing them through collec- 
tiviit measures, the gradual collectivism have precipitated 
a world-wide struggle for power. 



Gradual collectivism has reached its climax in the "Have- 
Not" nations. 


The evolution of large political unions was arrested about 
1870. The older nationalism united diverse peoples. 
The newer nationalism divides them. Unifying na- 
tionalism coincided with the ascendancy of liberalism, 
divisive nationalism with the ascendancy of collectivism. 
Is this coincidence or cause and effect? The American 


The tariff as illustration of why collectivism makes for 
separatism. Why the international socialism of the 
nineteenth century became the national socialism of the 
twentieth century. Authoritarianism is centrifugal. 
Emancipation is centripetal. 


The class war in Germany and Jhaly. The failure of 
socialism in Central Europe. The class war transformed 
by fascism into international war. 


The collectivist epoch has revived total wars that is, 
wars where the issue is supremacy. The limited wars 
of the liberal epoch. 


Pott-war pacifism was concerned with the limited wars 
of the liberal epoch* The League of Nations and the 
Kelkgg Pact. They failed because the whole world 


had turned against the liber*! policy which they implied* 
Total wan are not justiciable. Nor can they be de- 
cisive. . 



GREAT SOCIETY . . . . . .159 



The conviction that war it an anachronism is recent and 
marks a revolutionary change in the human outlook. 
The monument to Lord Chatham. .Mussolini and 
Hitler's eulogies of war.- The outlawry of war by the 
modern conscience is not due to sudden enlightenment* 
The real devastation of war is the dislocation of the econ- 
omy to which all the belligerents belong. Thus mod* 
era wars are civil wars within one Great Society. 

2. THE DIVISION OP LABOR . . . ., .161 

The revolutionary transformation from self-sufficiency to 
interdependence. The rise and fall of the Great Society 
in the Roman world. Its rebirth after the dark ages and 
its progress beginning in England in the eighteenth cen- 
tury. The accelerating tempo of the industrial revolu- 
tion in the past century and a half. The essential prin- 
ciple of the revolution is the division of labor. This is a 
vastly superior mode of production, and all true progres- 
sivism must conform to its necessities and its implications. 


This new economy requires a general readaptation of 
- usages, laws, institutions. But the readaptation lags be- 
hind the ^economic changes. This cultural lag is the 
cause of social problems. The paradoxes of poverty and 
plenty, democracy and insecurity, interdependence and 
imperialism, legal equality and social inequality, en- 
lightenment and degradation. All specific revolutions 

are incidents of the great industrial revolution. 



Collectivism of the right and of the left are forms of 
counter-revolution against the division of labor. The 


2. THE SOCIAL PROBLEMS . . . . . 210 

The maladjustment of the social order to the economy 
of the division of labor ii the locial problem which hai to 
be dealt with. 


A jurvey of the field of reform. Eugenics. Education. 
Conservation. The mobility of capital. Big Basinets. 
Business corporations. Money and credit. Inflation and 
deflation. The improvement of the markets. Necessi- 
tous bargains. Monopolies. Social insurance. Un- 
earned incomes. Public investments and social services. 
Taxation. The maldistribution of income. 


The required reforms are far-reaching. They are radical 
in regard to the social order and conservative in regard to 
economy of the division of labor. They will necessarily 
disturb many vested rights. They recognize the same 
evils as do the gradual coflectivists. Collectivism a mis- 
taken remedy for real abuses. Liberalism is the philos- 
ophy of the industrial revolution, and its object is to 
adapt the social order to the new mode of production. 
The liberal philosophy is only partially developed, and is 
beset with errors. 



The pioneer liberals recognized the need for security of 
transactions in the division of labor. Their myth about 
natural rights. The dogma of immutable legal rights. 
All legal rights are declared and enforced by the state. 
What the law makes it can change. How the law of 
rights and duties shall be changed is the constitutional 
problem of modern society. 


The real constitutional problem was not clearly defined in 

England. It was in America. The discovery that, with 

the dissolution of the ancestral habits of obedience, all 

, states derived their power from the people. The form- 


of the mass of the people. Madison on the 
of "refining** the will of the people. The me* 
chanical checks and balances of the American Constitu- 
tion are for this purpose. The purpose is more important 
to-day than in the eighteenth century, even if the means 
are not satisfactory. The authors of the Constitution 
conceived "the peeple" as having many dimensions. 
Their effort to provide true representation. 


Americans have always been afraid that the will of the 
people might not be successfully "refined.'* So the 
checks and balances were reinforced by judicial dogma. 
Judicial lawmaking. The resulting conflict. 


While judicial inhibition on popular sovereignty is un- 
tenable, the belief persists that democracy is not safe 
for the world. Something has been lacking in the con- 
ception of democracy. What is lacking is the corollary 
of democracy that the people cannot rule as heirs of Caesar 
but must rule in a way peculiar to popular government. 
Democracy has its own method of social control. It is 
the method of % common law which defines reciprocal 
rights and duties enforceable in courts rather .than a 
method of overhead administrative commands. 


Tliis method of social control makes it unnecessary to 
choose between anarchy and authority, individualism and 
the social interest. 


This method of social control belongs to the maturity 
of a people when they turn from paternal authority to 
fraternal association. 


MANDS 268 

Nineteenth-century individualists and collectivists both 
overlooked the democratic method of social control and 
fell into a furious debate on a false issue. Bnrke's mis* 
statement of the problem. Concrete illustration of a 


This method of social control implies a radical change 
in the current conception of property, contract, and the 
corporation. They are bundles of rights and duties de- 
fined by the state and alterable by the state. Thus, with- 
out overhead direction, economic activity can be compre- 
hensively regulated. 



This method of social reform iinplies that all officials, not 
merely judges, shall have a predominantly judicial tem- 
per. The distinction between tjie legislature and the ju- 
diciary is a practical expedient and not a difference in 
function. When legislators cease to be impartial among 
contending interests, they adopt an imperial view of 
their power. 


This method of social control gives the predominant in- 
itiative in law enforcement to injured parties. Thus it 
is flexible and encourages compromise and adjustment. 
Though unsuited to war and critical emergencies, it is 
otherwise economical in the employment of force. It 
does not require an aggrandized bureaucracy. 


This method of social control is suited to human capacity! 
Men can judge a dispute. They cannot plan and direct 
a social order. Justice is as high a purpose as a govern- 
ment can have. If it aims at some more grandiose end, 
it hat no durable basis. 


But, of course, a modern society cannot exercise all social 
control through private actions. Yet this is no exception 
to the principle. For as officials are multiplied, it is 
more than ever necessary that they should have defined 
rights and duties rather than plenary powers. In the 
liberal state the official and the private citizen are equals 
mylex the law. 



A popular legislature must delegate legislative power in 
technical afftin to special commissions. This makes it 
all the more important that it should preserve a-judicial 
attitude toward these commissions. They are not im- 
bued with sovereignty. 


SERVICES . . . . - . 302 

In the operation of public works and social services, the 
collective agencies are not viceroys of the king but char- 
tered corporations under the law. The principle illus- 
trated by the relation between the army and the civilians 
in a constitutional state. 


So-called private business corporations and so-called pub- 
lic agencies are to be regarded as collective agencies char- 
tered by the state with specific rights and duties that are 
to be adjudicated impartially and amended when the 
interests of justice require it. Many forms of collective 
action are possible in a liberal state. 


The rights of associations based on kinship and~fellowihip, 
the family, the neighborhood, the party, the guild, and 
the like, have perplexed liberal thinkers. The problem 
is by no means solved. But the road to a solution would 
seem to lie in the progressive definition, adjudication, and 
revision of the reciprocal rights and duties of such natural 



This conception of social control resolves the dilemma of 
centralization versus home rule, national sovereignty, and 
international order. The fantastic centralization re- 
quired by the collectivist theory of world peace. 


The dilemma exists only because men have confused cen- 
tralization by the aggrandizement of the executive with 
uniformity of law in wide jurisdictions. 


3. THE CIVIL SOCIETY- . . . . . 318 

The area of common conceptions of law U the area of 
peace in the modern world. Into this civil society all na- 
tions must enter, the backward and the aggressively re- 
bellious. Imperialism benign and self-liquidating. Im- 
perialism malign and destructive. The problem of the 
Have-Not nations, does not exist in that part of the 
Great Society which lives under substantially common law. 
The example of the United Kingdom. This civil so- 
ciety is required by the division of labor. World peace 
is not to be conceived as the creation of a world govern- 
ment but as the Result of a general acceptance by all gov- 
ernments of a common law. 


The conception of a common law is not a noble sentiment 
alone but the highest promise of the deepest necessity of 
the economy by which men live. The division of labor, 
common laws, the ideas of equal justice, restraint of pre- 
rogative and privilege, and peace as the policy of nations 
are organically related to a new way of life. 




The chief contenders for power in the modern world 
are fundamentally lawless. Thus they are incapable of 
terminating their struggle. 


The conviction that all laws must reflect the spirit of law 
has pervaded the whole effort to become civilized. In 
the nineteenth century the conception of a higher law 
was abused. The scorn of Bentham and Parcto for the 
higher, law. But mankind cannot do without it. 


In order to understand the spirit of the higher law, two 
examples may be studied. King James I and Chief 
Justice Coke. The vindication of habeas corpus. 



The logic of authority. The logic of liberation. 

5. THE HIGHER LAW . . . . . . 344 

The higher law defined. It is the prohibition of arbi- 
trariness in human transactions. The conception of a so- 
ciety which is good because h is free. 



The prohibition of arbitrariness is inspired by an affirma- 
tion of the creative energies of men. , 


Galileo and the Inquisitors. The rack versus the tele- 
scope as an instrument for studying astronomy. The 
rack illustrates arbitrary interference with creative en- 
ergy. All privilege is an arbitrary interference with cre- 
ative effort. The liberal conception of equality. The 
challenge to oppression comes from men arbitrarily in- 
terfered with in productive effort. For that reason free- 
dom from arbitrariness has had to accompany the division 
of labor, which in turn requires more freedom from arbi- 


The modern economy requires freedom from arbitrari- 
ness through equal laws. But it cannot be planned. No 
new social order can be designed. The agenda of liberal 
reforms is long, but there is no general plan of a new 
society. All plans of a new society are a rationalization 
of the absolute will. They are the subjective beginnings 
of fanaticism and tyranny. The liberal vision of society 
is grander than that of those who would be Caesar to the 
human race. It commits the future, not to a few finite 
politicians, but to the whole genius of mankind. 



We are a generation without convictions strong enough 
to challenge the ruthless. They can be found only in an 


intuition of the human destiny which is invincible 
became it it self-evident. 


A r&ume' of this inquiry. At whit final rampart muit a 
man stand when he fights for human freedom? The 
inviolability of man. 

3. MAN THE INVIOLABLE . . . . . 376 

The universal intuition of human inviolability has guided 
men in their ascent from barbarism and upon that rock 
the Good Society is founded. 


The degradation of man in the nineteenth century by 
the denial. of his inviolable essence. The Hegelians, 
Marxians, pseudo-Darwinians, and Spenglerians. The 
spiritual confusion of the modern age. Its blatant 
immorality. The chorus denouncing liberalism. The 
collectivist hostility to religious experience. 


Afl apologies for tyranny require the denial that the 
victims are human. The classic pattern is Aristotle's de- 
fense of slavery. The Servile State. 


The modern reaction against freedom Ss triumphant, but 
it is a disaster. It cannot prevail. It runs against the 
mighty energy in man which has overcome the inertia of 
the primordial savage. 

INDEX . 391 



There will be some fundamental assumptions which adherents 
of all the various systems within the epoch unconsciously presup- 
pose. . . . With these assumptions a certain limited number of 
types of philosophic systems are possible, and this group of systems 
constitutes the philosophy of the epoch. ALFRED NORTH 
WHITBHEAD, Science and the Modern World, page 69 

IN the violent conflicts which now trouble the earth the active 
contenders believe that since the struggle is so deadly it must 
be that the issues which divide them are deep. I think they 
are mistaken. Because parties are bitterly opposed, it does not 
necessarily follow that they have radically different purposes. 
The intensity of their antagonism is no measure of the di- 
vergence of their views. There has been many a ferocious 
quarrel among sectarians who worship the same god. 

Although the partisans who are now fighting for the mas* 
tery of the modern world wear shirts of different colors, their 
weapons are drawn from the same armory, their doctrines are 
variations of the same theme, and they go forth to battle sing* 
ing the same tune with slightly different words. Their weapons 
are the coercive direction of the life and labor of mankind. 
Their doctrine is that disorder and misery can be overcome 
only by more and more compulsory organization. Their 
promise is that through the power of the state men can be 
made happy. 

Throughout the world, in the name of progress, men who 
call themselves communists, socialists, fascists, nationalists, pro- 


gressives, and even liberals, are unanimous in holding that gov- 
ernment with its instruments of coercion must, by commanding 
the people how they shall live, direct the course of civilization 
and fix the shape of things to come. They believe in what 
Mr. Stuart Chase accurately "describes as "the overhead plan- 
ning and control of economic activity." * This is the dogma 
which all the prevailing dogmas presuppose. This is the mold 
in which are cast the thought and action of the epoch. No other 
approach to the regulation of human affairs is seriously con- 
sidered, or is even conceived as possible. The recently en- 
franchised masses and the leaders of thought who supply their 
ideas are almost completely under the spell of this dogma. 
Only a handful here and there, groups without influence, 
isolated and disregarded thinkers, continue to challenge it. 
For the premises of authoritarian collectivism have become the 
working beliefs, the self-evident assumptions, the unquestioned 
axioms, not only of all the revolutionary regimes, but of nearly 
every effort which lays claim to being enlightened, humane, 
and progressive. 

So universal is the dominion of this dogma over the minds 
of contemporary men that no one is taken seriously as a states- 
man or a theorist who does not come forward with proposals 
to magnify the power of public officials and to extend and 
multiply their intervention in human affairs. Unless he is 
authoritarian and collectivist, he is a mossback, a reactionary, 
at best an amiable eccentric swimming hopelessly against the 
tide. It is a strong tide. Though despotism is no novelty in 
human affairs, it is probably true that at no time in twenty-five 
hundred years has any western government claimed for itself 
a jurisdiction over men's lives comparable with that which is 
officially attempted in the totalitarian states. No doubt there 
have been despotisms which were more 'cruel than those of 

Economy of AbutUmce, p. 310. 


Russia, Italy, and Germany. " There has been none which was 
more inclusive. * In these ancient centres of civilization, several 
hundred millions of persons live under what is theoretically 
the absolute dominion of the dogma that public officials are 
their masters and that only under official orders may they live, 
work, and seek their salvation. 

But it is even more significant that in other lands where men 
shrink from the ruthless policy of these regimes, it is commonly 
assumed that the movement of events must be in the same 
general direction. Nearly everywhere the mark of a progres- 
sive is that he relies at last upon the increased power of officials 
to improve the condition of men. Though the progressives 
prefer to move gradually and with consideration, by persuading 
majorities to consent, the only instrument of progress in which 
the/ have faith is the coercive agency of government. They 
can, it would seem, imagine no alternative, nor can they remem- 
ber how much of what they cherish as progressive has come by 
emancipation from political dominion, by the limitation of 
power, by the release of personal energy from authority and 
collective coercion. For virtually all that now passes for pro- 
gressivism in countries like England and the United States calls 
for the increasing ascendancy of the state: always the cry is for 
more officials with more power over more and more of the 
activities of men. 

Yet the assumptions of this whole movement are not so 
self-evident as they seem. They are, in fact, contrary to the 
assumptions bred in men by the whole long struggle to extricate 
conscience, intellect, labor, and personality from the bondage 
of prerogative, privilege, monopoly, authority. For more than 
two thousand years, since western men first began to think about 
the social order, the main preoccupation of political thinking 
has been to find a law which would be superior to arbitrary 
power. Men, have sought it in custom, in the dictates of 


reason, in religious revelation, endeavoring always to set up 
some check upon the exercise of force. This is the meaning of 
the long debate about Natural Law. This is the meaning of 
a thousand years of struggle to bring the sovereign under a 
constitution, to establish for the individual and for voluntary 
associations of men rights which they can enforce against kings, 
barons, magnates, majorities, and mobs. This is the meaning 
of the struggle to separate the church from the state, to emanci- 
pate conscience, learning, the arts, education, and commerce 
from the inquisitor, the censor, the monopolist, the policeman, 
and the hangman. 

Conceivably the lessons of this history no longer have a 
meaning for us. Conceivably there has come into the world 
during this generation some new element which makes it neces- 
sary for us to undo the work of emancipation, to retracd the 
steps men have taken to limit the power of rulers, which com- 
pels us to believe that the way of enlightenment in affairs is 
now to be found by intensifying authority and enlarging its 
scope. But the burden of proof is upon those who reject the 
oecumenical tradition of the western world. It is for them to 
show that their cult of the Providential State is in truth the new 
revelation they think it is, and that it is not, as a few still believe, 
the gigantic heresy of an apostate generation. 



/ . Technical Progress and Political Reaction 

LIKE the man Who said he knew the earth was flat because it 
had looked flat to him in all the places he had ever visited, each 
generation is disposed to regard its main assumptions as self- 
evident even when in fact they have merely been adopted un- 
critically. Generally this disposition is fortified by some large 
interpretation of experience supplied by the learned men of the 
age. The doctrine of the divine right of kings was a classic 
example. The claim of the king to unlimited power was re- 
moved from the field of debate that is to say, was made 
axiomatic by the assumption that he ruled by the grace of 
God. The men who might have questioned the king were 
silenced because they did not dare to question the God who had 
appointed the king. 

The current return to the authoritarian principle in politics 
finds its principal sanction in the belief that the new machine 
technology requires the control of an omnipotent state. There 
are many versions of this basic idea. By some it is said that 
only the strong arm of government can protect men against the 
brutal oppression of their machines j by others that only the 
power of government can realize the beneficent promise of the 
machines. But all agree that in the recent progress of tech- 
nology there is some kind of deep necessity which compels man- 
kind to magnify the sovereignty of officials and to intensify 


their intervention in affairs. The modern state holds its 
sovereign power by grace of the gods of the machine. 

"As industry advances in mechanization," says Mr. Lewis 
Mumford, "a greater weight of political authority must develop 
outside than was necessary in the past.' 1 1 It is from this thesis 
that the intellectual leaders of the modern world have derived 
their belief that the liberal conception of the state belongs, as 
President Roosevelt once put it, to a "horse and buggy" era. 8 

Yet this thesis, which our generation has come to think of 
as self-evident, involves an extraordinary paradox. Thus Mr. 
Mumford, using a scheme invented by Professor Patrick 
Geddes, suggests that, "looking back over the last thousand 
years, one can divide the development of the machine and the 
machine civilization into three successive but overlapping and 
interpenetrating phases: the eo-technic [based on water-and- 
wood], the paleo-technic [based on coal-and-iron] and the neo- 
technic [based on electricity-and-alloy.]"* This is a con- 
venient and illuminating classification. But what must interest 
us here primarily is Mr. Mumford's deduction that in the 
neo-technic phase that is, the phase we are now in the 
officials of the state must regulate production and consumption, 
that at least in the field of what he calls the "basic require- 
ments" of food, clothing, shelter, and "necessary luxuries" 4 
the state must impose "rationed production" and "communized 
consumption" and "compulsory labor." * 

Is it not truly extraordinary that in the latest phase of the 
mochin* technic we are advised that we must return to the 
political technic that is, to the sumptuary laws and the forced 
labor which were the universal practice in the earlier phases 

1 Technics and Civilization, p. 420. 
'Interview to the Prew, May 31, 1935. 
* Of. cit., p. 1 09. 

p. 395. 

p. 405. 


of the machine technic? I realize that Mr. Mumford hopes 
and believes that the omnipotent sovereign power will now be 
as rational in its purposes and its measures as are the physicists 
and chemists who have invented alloys and harnessed electricity. 
But the fact remains that he believes the beneficent promise 
of modern science can be realized only through the political 
technology of the pre-scientific ages. For the whole apparatus 
of a politically administered economy, the fixed prices and 
fixed wages, the sumptuary laws, the forced labor, the com- 
munized consumption, the directed production, not to speak 
of the censored and managed opinion in the totalitarian states, 
is a reversion to the political technic which had to be .rejected 
in order that the industrial revolution could take place. It is, 
therefore, by no means self-evident that men must once again 
adopt this technic in order that the promise of the industrial 
revolution may be realized. 6 

For the regulation of industry by the state was never more 
minute than in the century before the great technical innova- 
tions. Think for a moment what that regulation meant. 
Take, for example, the famous system of reglements whereby 
Colbert, the minister of Louis XIV, sought to codify and 
generalize the industrial law/ From the year 1 666 until 1 730 
the regulations of the textile industry alone are contained in 
four quarto volumes of 2200 pages and three supplementary 
volumes. The rules for Burgundy and four neighboring dis- 
tricts, covering the manufacture of woolens, specify that the 
fabrics of Dijon and Selongey are to be put in reeds 1^4 ells 
wide, a warp to contain 44"x32" threads, including the 
selvedges, and when it comes to the fulling mill the cloth is to 
be exactly one ell wide. But in Semur and four other places 

6 The political technic of the industrial revolution is the theme of Book III. 
T The material that follows is from Eli F. Heckschert Mtrcmtitism, 
Vol. I, p. 157 et. teq. (London: George Alltn & Unwin Ltd.) 


the warp is to have 1376 threads, whereas Chatillon is to use 
1216 threads. Somehow the town of Langogne seems to 
have been overlooked until 1718, when an edict was published 
stating that "His Majesty is informed that no reglemcnt speci- 
fies from how many threads those cloths are to be composed) 
a matter which must be attended to without fail." 

If we ask how His Majesty was to know how many threads 
he should call for in Dijon, Semur, or Langogne, the answer 
is, of course, that he found this out from the established manu- 
facturers, and that his reglements were essentially a device for 
protecting their vested interest against the competition of enter- 
prising innovators. This is the inevitable method of authori- 
tative regulation, for no king and no bureau can hope to imagine 
a technic of production other than the technic which happens 
to exist. Occasionally the government may have a bright idea, 
but its normal procedure must inevitably be to throw the weight 
of its authority behind the routine of the established interests. 
What Colbert did under Louis XIV was precisely what General 
Johnson * and Secretary Wallace did under President Roose- 
velt. Colbert regulated industry and agriculture by fortifying 
and subsidizing the established producers, and he tried to be 
thorough. The manufacturers of Saint-Maixent "had to ne- 
gotiate for four years, from 1730 to 1734, before they could 
secure permission to use black warp."* They never were 
allowed to weave in black weft. 

Naturally the system did not work very well. The more the 
riglements,were violated, the more the r&glements were multi- 
plied. Lawsuits were endless, smuggling and bootlegging 
omnipresent, and every so often the government set out to prove 
that it not only issued regulations but meant them. It felt 
particularly vehement about printed calicoes; for the French 
printing industry was backward and the textile producers de- 

. 9 Cf. The ABC of the NRA, published by Brokings Institution. 
f Hecbcher, of. <**., p. 170. 



manded protection. Certainly the government did its best. 
"It is estimated," says Heckscher, "that the economic measures 
taken in this connection cost the lives of some 16,000 people, 
partly through executions and partly through armed affrays, 
without reckoning the unknown but certainly much larger num- 
ber of people who were sent to the galleys, or punished in other 
ways. On one occasion in Valence, seventy-seven were sen- 
tenced to be hanged, fifty-eight were to be broken on the wheel, 
six hundred thirty-one were sent to the galleys, one was set free 
and none was pardoned. But even this vigorous action did not 
help to attain the desired end. Printed calicoes spread more 
and more widely among all classes of the population, in France 
as everywhere else." ao 

Authoritative regulation of an economy is not a modern in- 
vention. On the contrary, it was practised by the Pharaohs in 
Mr. Mumford's eo-technic phase of machine civilization. 
Under Diocletian it was the recognized method of government, 
under the Byzantine emperors, under Louis XIV, under Haps- 
burgs and Romanoffs. Far from being something new, de- 
duced from what Mr. George Soule calls "the growth 'of 
technical civilization," it has been from immemorial antiquity 
the practice of governments in a pre-technical civilization. As 
a matter of fact, it was the polity of the Ancien Regime. 

Now there is very good reason why the authoritative regula- 
tion of industry is appropriate to a primitive economy, and why 
it is inappropriate to one in which technical change is continual 
and radical. The overhead direction of an economy must by 
its very nature be general. Only occasionally can the com- 
mands and prohibitions be changed. This method of social 
control is suited, therefore, to a well-established routine which 
has to be altered only at rare, intervals. But in the industrial 
revolution there is constant technical change, due to continual 
invention. The best machines of yesterday will be old- 
. 17$. 


fashioned machines to-morrow. The official cannot issue new 
commandments as fast as the inventors can invent. If he bases 
his decrees on yesterday V process, he must either suppress to- 
morrow's process or he must connive at disorder. The intro- 
duction of new methods cannot be coerdvely planned and 
directed. For until the new methods have been tried out no 
one can know what decrees to issue. Men learned this in the 
eighteenth centuiy. They found out that they must either 
forbid new inventions, as the French monarchy did when con- 
fronted with printed calicoes, or they must give up the attempt 
to havQ officials direct the processes of production. It is, 
therefore, no coincidence that minute direction from above has 
always been found in a relatively unprogressiye economy. For 
new inventions are made by trying out all sorts of schemes to 
find out whether they work. But the experiment does not end 
at the laboratory door. It goes on. The next step is to in- 
stall one or two of the new machines in a factory or to build a 
small experimental factory which is something between a 
laboratory and a commercial concern. Even then the experi- 
mentation is not ended. For if the new scheme is to work, the 
process of adopting it throughout an industry has to be carried 
on experimentally over and over again in relation not merely 
to the technic but to all the other factors, such as the cost of 
capital, the wages and skill of labor, the aptitude of the mana- 
gers, and the like. That is why directive laws by their 
nature static and inert are technically unsuited to the highly 
dynamic character of the industrial revolution. 

2. Machinery and Corporate Concentration 

Those who argue that the advancing industrial technic re- 
quires increasing political authority have probably been misled 
by certain of the phenomena of modern industrialism. They 


sec, for example, that in some branches of production a few 
large concerns or even one . alone control the industry, 
fixing prices and wages. They then assume that this concen- 
tration of industrial power is the result of machine production, 
that it does not regulate itself in a competitive market* and that, 
therefore, it must be regulated by a very strong govern- 

But in this argument the initial assumption is a fallacy. The 
concentration of control does not come from the mechanization 
of industry. It comes from the state, which began about a 
hundred years ago to grant to anyone who paid a nominal fee 
what had hitherto been a very special privilege. That was the 
privilege of incorporation with limited liability and perpetual 
succession. President Nicholas Murray Butler has said of this 
momentous legal revolution: 

I weigh my words when I say that in my judgment the limited 
liability corporation is the greatest single discovery of modern times, 
whether you judge it by its social, by its ethical, by its industrial, or, 
in the long run, after we understand it and know how to use it, 
by its political effects. Even steam and electricity are far less im- 
portant than the limited liability corporation, and they would be re- 
duced to comparadve impotence without it. 11 

This is no exaggeration. For, without the privileges and 
immunities of the corporate form of economic organization and 
property tenure, the industrial system as we know it could not 
have developed and could not exist. So fundamentally true is 
this that we should do well to follow the suggestion of Messrs. 
Berle and Means and speak not of the capitalist system but of 
the corporate system. 12 If that system exhibits a high degree 
of concentrated control, the cause is to be found not in the 
technic of production, but in the law. 

21 Why Should We Change Our Form of Government? , p. 82. 
u The Modem Corporation and Private Property. 


What, to take obvious examples, has the machine technology 
to do with the chain store or with the United States Steel 
Corporation or the General Motors Corporation? These or- 
ganizations exist because of a special and- recent development 
of the law which permits one limited liability corporation to own 
other limited liability corporations. There may possibly be 
some small industry, perhaps one based on a secret process or 
an exclusive patent, where control is concentrated without use 
of the privilege and immunities of the corporate device. But 
it would be neither representative nor significant. The con- 
centration of control in modern industry is not caused by tech- 
nical change but is a creation of the state through its laws. 
This is obviously true of public utilities, which hold a franchise 
for a monopoly. It is no less true of all other industries which 
approach monopoly. 

We must not let ourselves confuse monopolistic control with 
the large-scale production required by expensive machinery. 
The scale on which factories have to be organized in order to 
make the most efficient use of new inventions and labor-saving 
machinery may look big. But it is practically never so big as 
the industry. 11 In other words, while large factories may, up 
to a point, be more efficient than small ones, no factory needs 
to be or can be big enough to supply the whole market. Mass 
production does not require monopoly. When the Steel Cor- 
poration enlarges its business it does not necessarily enlarge its 
plant in Pittsburgh. It builds another somewhere else. What 
holds together these various plants is not the technic of mass 
production but the legal device of incorporation. 

The assumption that great corporate capitalism is in some 
mysterious way the inexorable consequence of machinery is an 
illusion. What is more, it is by no means certain that the 

" Cf. Big Business: Its Growth and Place, published by Twentieth Century 
Fund, Inc. 


highest development of technology is favored by this concen- 
trated corporate control. It is a matter of common knowledge 
that beyond a certain point increasing size yields a diminishing 
return, that many of the biggest corporations are too big to be 
well managed, and that they become rigid and opposed to 
change. There is sound reason for thinking that the laws which 
foster concentrated control are from the point of view of tech- 
nological progress reactionary, that they retard it rather than 
promote it, and that industrial laws suited to the genius of 
modern technology would vary in important respects from the 
laws which exist. Laws adapted to modern technology would 
almost certainly seek to discountenance a scale of production 
beyond the point of technical efficiency, to discourage concen- 
trated control which weakens the incentives, destroys the ob- 
jective criteria of the competitive market; they would seek to 
prevent the erection of great and rigid capital structures which 
make technical change ruinously expensive. 

The collectivists who think that business must grow bigger 
and bigger until only the government is big enough to dominate 
it would pile Ossa on Pelion. They are not interpreting the 
inward principle of the modern industrial revolution. They 
are ascribing to the technicians results which have been pro- 
duced by lawyers and politicians. They are proposing, as a 
remedy for the evils resulting from the mistakes of the law- 
makers, political measures which long ago had to be abandoned 
in order that the technicians could do their work. 

There is no doubt about the evil of corporate concentration. 
But that very evil the collectivists accept, sanctify as necessary, 
and then propose to multiply a thousandfold by effecting a 
super-concentration in the state. It is not a necessary evil. 
Concentration has its origin in privilege and not in technology. 
Nor does technology require high concentration. For technical 
progress, being in its essence experimental, calls for much trial 


and error. That means that if industry is to advance tech- 
nically, it must be flexible, not rigid} change must be possible 
because it is not too costly; managers must be free, as technicians 
are free, to make many mistakes in order to achieve a success. 

Those who do not like such a programme, who would prefer 
industry stabilized into routine and administered by corporate 
or public bureaucrats, are entitled to their preference. But 
they must not pretend that they are the spokesmen of modern 
science seeking to make more effective man's mastery of nature. 
If what they are seeking is a social order in harmony with the 
genius of the scientific method and of the modern economy of 
production, they should look with the profoundest skepticism 
upon the claims of the collectivist movement. Whatever 
form collectivism takes, whether the great corporate structures 
of private enterprise, or the national collectivism of the fascists, 
of the communist or of the gradualist parties, its adherents 
claim to be adapting the organization of industry to the progress 
of technology. Against that claim there is a strong pre- 
sumption. For these great centralized controls which have 
to be governed authoritatively by corporate officials or by public 
officials are unsuited to a system of production which can profit 
by new invention only if it is flexible, experimental, adjustable, 
and competitive. The laboratories in which the technic is be- 
ing developed cannot produce the inventions according to a 
centrally directed plan. The future technology cannot be 
predicted, organized, and administered, and it is therefore in 
the highest degree unlikely that an elaborately organized and 
highly centralized economy can adapt itself successfully to the 
intensely dynamic character of the new technology. 

It is not probable, therefore, that "as industry advances in 
mechanization, a greater weight of political power must de- 
velop outside than was necessary in the past." There is, on the 
contrary, a strong presumption that the collectivist movement 


is a tremendous reaction in human affairs, that on the main line 
along which western society has advanced it is carrying man- 
kind backward and not forward. The eollectivists generalize 
from an interpretation of a relatively short historical epoch. 
They have confused the phenomena of the latest phase of the 
corporate system with the consequences of modern technology. 
They have come to think of these phenomena as fatally de- 
termined, when in fact, without foreseeing the consequences, the 
nineteenth-century states permitted and provoked them. This 
was done, as I hope to demonstrate, 14 because the liberal demo- 
crats, mistaking the privileges of corporate bodies for the rights 
of man, the immunities of artificial persons for the inviolability 
of natural persons, the possession of monopolies for private 
property, failed to develop their own intuitions and their own 

Because they have assumed that the development of con- 
centrated corporate capitalism is the natural and necessary out- 
come of the new technology, the eollectivists, whether they be 
big businessmen or socialists, have turned from the liberal to the 
authoritarian conception of society. Had they taken a longer 
view they- would have questioned their basic premise, remem- 
bering that the scientific achievements which they now regard 
as compelling the establishment of authority became possible 
only as scientific inquiry was emancipated from authority. 
However pleasant its promises, they would have hesitated to 
revive the absolute state. They would have remembered that 
before modern society could be created the state had to be sub- 
jected to a constitutional system. They would have been slow 
to return to compulsion as an instrument of "synthesis, 
coSrdination, and rational control," 1 * and as the specific for 
private acquisitiveness and antisocial behavior. They would 

14 Ch. X. 

11 George Soule, A Plmnel Society, p. 91. 


have recalled the long experience of mankind with the cor- 
ruption of personal power. They would not have talked so 
easily about socializing and unifying nations by commands from 
the government had they remembered that the ascendancy of 
national kings over local barons, the unification of national states 
from discordant tribes, were revulsions against vexatious, ex- 
clusive, and intimately despotic authority. They would never 
have forgotten that modem technology and the greater abun- 
dance which have come from the division of labor followed the 
emancipation of men from the elaborate restrictions of the 
guilds and the mercantilist policies of landed interests and of 
ecclesiastical and dynastic power. 

But these things have been forgotten by the teachers and 
leaders to whom this generation listens. In the past sixty or 
seventy years it has become the primal premise of thought and 
action that human progress must come not through a greater 
emancipation but through a revival of authority. However, 
the plain fact of the matter is that under the dominion of this 
doctrine progress has been arrested gradually but cumulatively, 
until at last there is a spectacular regression to lower standards 
of life and to a more degraded level of civilization. Though 
the apparatus of governing was never more elaborate, the 
world economy has been disintegrating into diminishing frag- 
ments. Even in the United States there has been a notable 
tendency to set up within the highly protected national economy 
all kinds of covert regional and occupational barriers by means 
of which special interests use political power to obtain exclusive 
advantages. It is unnecessary to do more than point to the 
atomization of Europe, where the separatist tendencies, not only 
among national states but within them, are everywhere pro- 
voked by the exercise of authority and with difficulty suppressed 
by the exercise of more authority. 

But it should be noted particularly that the intensification of 


government is not only aggravating the disunion which it seeks 
to prevent; it is arresting that very advance in science which is 
the reason given for the magnified officialdom. In several 
great nations proclaiming themselves the advance guard of 
human progress, free inquiry, which is the condition of scientific 
discovery, has been abolished in order that government may 
be more effective. Thus the naive interpreters of the modern 
world who have justified the increase of authority in order to 
realize the promise of science find themselves facing the 
awkward fact that science is being crushed in order to increase 
the authority of the state. 

3. Progress by Liberation 

The events we are witnessing should not allow us to remain 
blind any longer to the truth that our generation has misunder- 
stood human experience. We have renounced the wisdom of 
the ages to embrace the errors the ages have discarded. The 
road whereby mankind has advanced in knowledge, in the 
mastery of nature, in unity, and in personal security has lain 
through a progressive emancipation from the bondage of au- 
thority, monopoly, and special privilege. It has been through 
the release of human energy that men have lifted themselves 
above the primeval struggle for the bare necessities of- ex- 
istence j it has been by the removal of constraints that they have 
been able to adapt themselves to the life of great societies; it has 
been by the disestablishment of privilege that mfen have risen 
from the status of slaves, serfs, and subjects to that of free men 
inviolate in the ways of the spirit. 

And how else, when we pause to ponder the matter, can the 
human race advance except by the emancipation of more and 
more individuals in ever-widening circles of activity? How 
can new ideas be conceived? How can new relationships, new 




habits, be formed? Only by increasing freedom to think, to 
argue, to debate, to make mistakes, to learn from those mis- 
takes, to explore and occasionally to discover, to be adventurous 
and enterprising, can change be more than the routine of a 
recurrent pattern. If those who happen by inheritance, elec- 
tion, or force to achieve the power to govern are not the sole 
originators of new ways, it follows that the energy of progress 
originates in the great mass of the people as the more gifted 
among them are released from constraint and stimulated by 
intercourse with other free-thinking and free-moving indi- 

This was the faith of the men who made the modern world. 
Renaissance, Reformation, Declaration of the Rights of Man, 
Industrial Revolution, National Unification all were con- 
ceived and led by men who regarded themselves as emanci- 
pators. One and all these were movements to disestablish 
authority. It was the energy released by this progressive 
emancipation which invented, wrought, and made available to 
mankind all that it counts as good in modern civilization. No 
government planned, no political authority directed, the material 
progress of the past four centuries, or the increasing humanity 
which has accompanied it. It was by a stupendous liberation 
of the minds and spirits and conduct of men that a world-wide 
exchange of goods and services and ideas was promoted, and 
it was in this invigorating and sustaining environment that petty 
principalities coalesced into great commonwealths. 

What reason, then, is there for thinking that in the second 
half of the nineteenth century the tested method of human 
progress suddenly became obsolete, and henceforth it is only 
by more authority, not by more emancipation, that mankind 
can advance? The patent fact is that soon after the intellectual 
leaders of the modern world abandoned the method of freedom 
the world moved into an era of intensified national rivalry, 


culminating in the Great War, and. of intensified domestic 
struggle which has racked all nations and reduced some to a 
condition where there are assassination, massacre, persecution, 
and the ravaging of armed bands such as have not been known in 
the western world for at least two centuries. 

We belong to a generation that has lost its way. Unable 
to develop the great truths which it inherited from the emanci- 
pators, it has returned to the heresies of absolutism, authority, 
and the domination of men by men. Against these ideas the 
progressive spirit of the western world is one long, increasing 
protest. Thus we have rent the spirit of man, and those who 
by their deepest sympathies seemed destined to be the bearers 
of the civilizing tradition have turned against one another in 
fratricidal strife. 

What could be more tragically and more preposterously con- 
fused than this choicer Must men renounce all that their 
ancestors struggled to achieve, or abandon the hope of making 
the world a better place for their children? Must they dis- 
regard as so much antiquated nonsense the principles by which 
governments were subjected to law, the great made accountable, 
the humble established in their rights? Shall they not remem- . 
ber the experience by which the violence of civil factions was 
subdued? Must they forget how their forefathers suffered and 
died in order that tyranny should end and that men should be 

It is the choice of Satan, offering to sell men the kingdoms of 
this world for their immortal souls. And as always, when that 
choice is offered, it will be discovered after much travail that 
on those terms not even the kingdoms of the world can be 



/. The Reception of a Myth 

EVEN if he remembers the struggle against absolutism, the 
contemporary collectivist will resent the charge that he is 
leading men bade to the old order of things. He has such 
very different intentions from those which he imputes to the 
ministers of Louis XIV. For his eyes are upon the future, 
whereas theirs were on the past. They sought to preserve a 
great inheritance. He seeks to contrive a glorious destiny. 
If, like them, he relies upon the pervasive regulation of men's 
affairs, he feels sure that his different purpose will produce a 
different result. 

He feels sure that it will because he hopes that it will. His 
ardent wish makes plausible one of the most enchanting myths 
which ever captured the human imagination. From the mar- 
riage of knowledge with force a new god is to be born. Out of 
the union of science with government there is to issue a provi- 
dential state, possessed of all knowledge and of the power to 
enforce it. Thus at last the vision of Plato is to be realized: 
reason will be crowned and the sovereign will be National. The 
philosophers are to be kings; that is to say, the prime ministers 
and their parliaments, the dictators and their commissars, are to 
follow the engineers, biologists, and economists who will ar- 
range the scheme of things. The men who know are to direct 
human affairs and tide directors are to listen to those who know. 
Though the providential state of the future is to have all the 


authority of the most absolute state of the past, it is to be 
different} consecrated technicians are to replace the courtiers 
and the courtesans of the king, and the irresistible power of 
government is to dispose of mankind. 

This myth has taken hold of the human imagination as 
ancestral religion has dissolved under the acids of modernity/ 
Men find themselves in a troubled world where they no longer 
look confidently to God for the regulation of human affairs, 
where custom has ceased to guide and tradition to sanctify the 
accepted ways. The dissolution of faith had been under way 
for generations, but in 1914 there took place a catastrophic un- 
scttlcment of the human routine. The system of the world's 
peace was shattered; the economy which was the condition of 
its prosperity was dislocated. A thousand matters once left 
to routine and taken for granted became questions of life and 

In the darkness there was a desperate need for light. Amid 
overwhelming circumstance there was a desperate need for 
leading. In the disorder, as men became more bewildered in 
their spirits, they became more credulous in their opinions and 
more anxiously compulsive in their actions. Only the sci- 
entists seemed to know what they were doing. Only govern- 
ments seemed to have the power to act. 

The conditions could not have been more favorable to the 
reception of the myth. Science had become the only human 
enterprise which all men looked upon as successful. Society 
was broken and unruly. The need for authority was acute, 
yet the authority of custom, tradition, and religion was lost. 
In their extremity men hastened to entrust to government, which 
can at least act decisively and impressively, the burden of 
shaping their destiny. In science there was knowledge. In 
government there was power. By their union an indispensable 

1 Cf. my Pnf*' *<> Monli, Part I. (Lnb*: Gnrgr Allen & Vnwin ltd.} 


providence was to be created and the future of human society 
contrived and directed. The people longed for kings who 
weft philosophers. And so the men who wished to be kings 
declared that they were philosophers. All the things lacking 
in the actual world were projected upon the imaginary state that 
mon so desperately desired. 

2. The Agents of Destiny 

But when we remember that any government is composed of 
mortal men, it is evident that there must be limits to the degree 
in which a social order can be planned and deliberately ad- 
ministered. It makes no difference whether the rulers of a 
state inherit authority or were elected to it, whether they re- 
ceived it by appointment or have captured it by force j it makes 
no difference where they came from or how they are thought 
to be inspired or to what grandeur and glory they aspire. 
They are men, and so their powers are limited. And the limits 
of their powers lie a long way this side of omniscience and 
omnipotence. It follows that though the ruler may think he 
has his patents from God, he does not have the wisdom or the 
power of God. Though he has his authority from the people, 
the potentialities of the human race are not realized in him. 

No matter, therefore, how nobly the government may be 
derived, its faculties are not thereby commensurate with its 
origins: the king descended from Zeus does not inherit the 
competence of Zeus, and the elected ruler of a nation is not 
the mystical possessor of all his people's genius. Nor does the 
declaration of a government's purposes mean that it possesses 
the faculties to achieve them. Where there is a wish, there is 
not necessarily a way. Devotion to an end does not ensure the 
discovery of the means; pretensions do not magnify men's 
powers. And so the real, rather than the apparent, policy of 


any state will be determined by the limited competence of finite 
beings dealing with unlimited and infinite circumstances. 

Amid all the grandiose generalization and passionate will- 
fulness of political debate, it is perilous to lose the humility 
which is the guardian of our sanity. The eye must recapture its 
innocence if it is to see things as they are: to see not the New 
Deal in terms of its aspirations, but the New Dealers in their 
actual careers; not fascism or communism as ideas, but fascists 
and communists as they govern great nations; to remember 
that while ideals are illimitable, men are only men. And when 
these men, brdlathing the incense burned before their altars, are 
tempted to regard themselves as the directors of the human 
destiny, they need to be reminded o the poet who, after a night 
in town, wandered into the zoo thinking rather well of himself 
as the last product of evolution until he became sober enough 
to remember that he was, after all, "a little man in trousers, 
slightly jagged." * 

Governments are composed of persons who meet occasionally 
in a hall to make speeches and to write resolutions; of men 
studying papers at desks, receiving and answering letters and 
memoranda, listening to advice and giving it, hearing com- 
plaints and claims and replying to them; of clerks manipulating 
more papers; of inspectors, tax collectors, policemen, and sol- 
diers. These officials have to be fed, and often they overeat. 
They would often rather go fishing, or make love, or do any- 
thing, than shuffle their papers. They have to $l6ep. They 
suffer from indigestion and asthma, bile and palpitation, become 
bored, tired, careless, arid have nervous headaches. They know 
what they have happened to learn, they are aware of what they 
happen to observe, they can imagine what they happen to be 
interested in, they can accomplish only what they can command 
or persuade an unseen multitude to do. 

*The Menagerie," by William Vaughn Moody. 


In the prevailing view they are the agents of destiny. It is 
they, or others panting to take their places, who are to contrive 
the shape of things to come. They are to breed a better race 
of men. They are to arrange abundance for all. They are to 
abolish classes. They are to take charge of the present. They 
are to conceive the future. They are to plan the activities of 
mankind. They are to manage its labors. They are to formu- 
late its culture. They are to establish its convictions. They 
are to understand, to forecast, and to administer human purposes 
and to provide a design of living for the unborn. Surely, 
greater love could no man have for the wisdom of his rulers 
than this, that he should put his life entirely in their hands. 

In order to magnify the purposes of the state it is obviously 
necessary to forget the limitations of men. But in reality the 
limitations prevail and the behavior of the state must conform 
to them. Governments can do no more than they can do. In 
any one period there is, as it were, no more than a certain capacity 
to govern. This may gradually be increased by education and 
the invention of new instruments. There is no doubt, for ex- 
ample, that by means of such inventions as the telephone and 
telegraph, the typewriter and the printing press, calculating 
machines, and swifter means of transportation, the scale of ef- 
fective government has been greatly enlarged since Aristotle 
said that a community must not extend beyond the territory 
which a naked eye could encompass. 

But though men at the centre of authority can communicate 
with more men over greater distances than they could before, 
it must be remembered that by extending their influence they 
have complicated their task. These new instruments do not 
represent additional powers for governing the original com- 
munity. If that were the case, they might be considered a net 
gain in the effectiveness of government. 

But the fact is that though President Roosevelt has a greater 
reach than Pericles, he needs a very much greater reach. The 


new instruments at Mr. Roosevelt's disposal serve his work no 
better than the tools of Pericles served his. The increase of the 
Scale of human organization has complicated the work to such 
a degree that it is by no means certiin that modern equipment 
is relatively more efficient. It would be rash, for example, to 
assume that Mr. Roosevelt can learn more about the needs and 
desires of the people of the United States through the news- 
papers and his mail and the reports of his advisers, though they 
travel by airplane and report by telephone, than Pericles could 
learn about Athenian public opinion through word of mouth} 
or that Mr. Roosevelt can convey more of his intentions to a 
larger proportion of his people by broadcasting his speeches 
than Pericles could by speaking in the agora. 

A steam shovel can move more dirt than a spade, but it will 
not move a mountain more efficiently than a man can turn over 
the earth in his garden. If men can travel faster but have to 
go farther, they do not thereby arrive sooner at their destination. 
If they can do more but have more to do, they have not achieved 
their purposes more completely. To some very considerable 
degree, which obviously cannot be exactly determined, the ef- 
fectiveness of the new instruments is neutralized by the fact 
that as the scale of government is enlarged its complexity is 

The human beings who actually govern have apparatus which 
covers more ground and therefore gives them more ground 
to cover. In between their greater complexities on the one 
hand and their more efficient instruments on the other they 
remain human beings with faculties of insight and foresight that 
have not grown appreciably greater in recorded history, and 
may in any one generation be regarded as fixed. 

I do not suggest that this quantum can be measured. But 
I do suggest that the existence of some such relatively fixed 
limitation of human faculties can be inferred. Both in thought 
and in action there are continual choices in which something 


has to be renounced if another thing is to be attained .Man 
cannot know and do all things. That is the mark of his 
mortality. He has to choose between the comprehensive and 
the specialized view; between the broad but shallow and the 
narrow but deep; between the large and cool, the small and 
hot, the panorama and the portrait; between a macro* and a 
microscopic understanding. In action, too, he must choose, 
one career excluding others, one course foreclosing its alterna- 
tives. By turning his face in one direction he turns his back in 
the other. So the decisions that men make in their practical 
affairs, like the decisions which determine the policies of states, 
are alternatives in which, because all things cannot be achieved 
at once, there is some sacrifice for every gain. So it is with 
statesmen: in deciding where they will spend their modicum 
of energy they must decide what purposes they will renounce, 
what desires they will, with Burke, leave to "a wise and salutary 

Those who formulate the laws and administer them are men, 
and, being men, there is an enormous disparity between the 
simplicity of their minds and the real complexity of any large 
society. Attempts have been made, to be sure, to argue that 
the whole complex reality may be mystically present in the 
spirit of a popular legislature or even in that of a dictator; 
that somehow a few minds can be inspired to the point where 
they are universal and inclusive. Thus the voice of the people 
speaking through their representatives has been regarded as the 
voice of God, and, when it seemed a little too preposterous 
to think of three or four hundred politicians as inspired, the 
even more preposterous claim has been advanced that some 
triumphant agitator contains within himself the mind and spirit 
and faith of great populations. 

All this is not one whit more credible than the notion once 
held by the whole European civilization that the earth, as 


Shakespeare said, is "this huge stage . . . Whereon the stars 
in secret influence comment." Such philosophy made it cer- 
tain that the wife of Bath was to be .hardy and lusty because 
at her birth Mars was in the constellation Taurus/ The sup- 
position that the rulers of a state can be fully representative of 
a whole society is a superstition of the same order, and in 
practice a more sinister one. 

The ruler in any society is a private man doomed to take 
partial views. He may be looked upon as standing at the 
small end of a funnel which at its large end is as wide as the 
world in the past, the present, and the future. All that is 
relevant to human affairs ought to come through the funnel and 
into his mind. But in fact at the receiving end no more may 
pass through than he can understand. That is a very small 
part of the whole. And to understand even that small part 
he must turn to theories, summaries, analyses, principles, and 
dogmas which reduce the raw enormous actuality of things to 
a condition where it is intelligible. 

Having mastered what he can, the ruler has then to contrive 
a method of thought enabling him to formulate policies which 
by small actions will produce large effects. He cannot govern 
every transaction. He cannot issue a specific command to each 
person. Only here and there can he intervene, hoping that 
his measures will multiply and reverberate. For in his actions, 
as in his understanding, he is at the small end of an instrument 
which at the other end opens to the whole world. 

3. The Illusion of Control 

There is no possibility, then, that men can understand the 
whole process of their social existence. Life goes on only be- 
cause most of its processes are habitual, customary, and un- 

1 J. L. Lowes, Gtofrty Chtuctr, pp. 20-21. 


conscious. If they tried to think about everything, drawing 
each breath deliberately, willing each act before they acted, it 
would require such bewildering effort merely to exist that they 
would sink rapidly to the level of a conscious vegetable. It is 
only because men can .take so much for granted that they can 
iqquire into and experiment with a few things. "Foresight 
itself," says Whitehead, "presupposes [the] stability of a 
routine. But for the immense economy in which experience 
becomes habitual and unconscious, men would have neither the 
time nor the energy for deliberation." 4 

The thinker, as he sits in his study drawing his plans for the 
direction of society, will do no thinking if his breakfast has not 
been produced for him by a social process which is beyond his 
detailed comprehension. He knows that his breakfast depends 
Upon workers on the coffee plantations of Frazil, the citrus 
groves of Florida, the sugar fields of Cuba, the wheat farms 
of the Dakotas, the dairies of New York; that it has been as- 
sembled by ships, railroads, and trucks, has been cooked with 
coal from Pennsylvania in utensils made of aluminum, china, 
steel, and glass. But the intricacy of one breakfast, if every 
process that brought it to the table had deliberately to be 
planned, would be beyond the understanding of any mind. 
Only because he can count upon an infinitely complex system 
of working routines can a man eat his breakfast and then think 
about a new social order. 

The things he can think about are few compared with those 
which he must presuppose. They are as the world he can see 
with his eye is to the far reaches of the heavens and the deep 
recesses of matter. Of the little he has learned, he can, more- 
over, at any one time comprehend only a part, arid of that 
part he can attend only to a fragment. The essential limitation, 
therefore, of all policy, of all government, is that the human 

of H*u, p. 1 14 ** s*q. 


mind must take a partial and simplified view of existence. The 
ocean of experience cannot be poured into the little bottles of 
our intelligence. The mind is an instrument evolved through 
the struggle for existence, and the strain of concentrating upon 
a chain of reasoning is like standing rigidly straight, a very 
fatiguing posture, which must soon give way to the primordial 
disposition to crouch or sit down/ 

The mind, moreover, was evolved as an instrument of de- 
fense and for the mastery of specific difficulties: only in the 
latest period of human development have men thought of try- 
ing to comprehend a whole situation in all its manifold com- 
plexity. Even the intellectual conception is beyond men's 
capacities. In actual affairs they have to select isolated phe- 
nomena, since they have only limited energy and a short time 
in which to observe and to understand: out of the infinite 
intricacy of the real world, the intelligence must cut patterns 
abstract, isolated, and artificially simplified. Only about these 
partial views can men think. Only in their light can men act. 
To the data of social experience the mind is like a lantern which 
casts dim circles of light spasmodically upon somewhat familiar 
patches of ground in an unexplored wilderness. 

It is, therefore, illusion to imagine that there is a credible 
meaning in the idea that human evolution can be brought under 
conscious control. And there can be no illusion except to those 
who take it for granted that what their minds have failed to 
grasp is irrelevant, that what they can comprehend intellectually 
is all that is necessary in dealing with a situation. No doubt 
it is true that the human mind could plan a society which it 
understood and direct one of which the scheme was intelligible. 
But no human mind has ever understood the whole scheme of 
a society. At best a mind can understand its own version of 
the scheme, something much thinner, which bears to reality 

9 John Murphy, Prtmitiv* Man, p. 76. 


some such relation as a silhouette to a man. Thus policies 
deal with abstractions, and it is only with abstracted aspects 
of the social order that governments have to do. 

For this reason social control can never be regarded as even 
an approximation to the kind of mastery Which men have 
ascribed to God as the creator and ruler of the universe. It 
was God's prerogative to make a world suitable to His gov- 
ernance. Men govern a world already in being, and their 
controls may best be described as interventions and interfer- 
ences, as interpositions and interruptions, in a process that as 
a whole transcends their power and their understanding. Men 
deceive themselves when they imagine that they take charge of 
the social order. They can never do more than break in at 
some point and cause a diversion. 

A doctrine, a policy, measures, can take account only of cer- 
tain of the more immediate and obvious aspects of a situation. 
The actual situation, as suggested by the assembling of orange 
juice, coffee, and toast for breakfast, is the result of a moving 
equilibrium among a virtually infinite number of mutually de- 
pendent variables. 6 A conceptual grasp of such a complex is 
not to be achieved, as Henderson shows, by the ordinary method 
of "cause and effect analysis," though it must be remembered 
that even in the use of such simple logic the hereditary, elected, 
and self-appointed rulers of men are not preeminently gifted. 
The logic by which it might become possible to analyze the 
"mutually dependent variations of ... variables" is such an 
abstruse logico-mathematical undertaking that it is as much 
beyond the lay mind of a minister of public affairs or his 
technical advisers as chemistry is beyond a cook. As a matter 
of feet, it is a method of thought that even the most advanced 
students of human affairs are able to use only tentatively and 
most imperfectly. 

6 Cf. L. J. Henderson's Panto's General Sociology. 


Yet such a complex logic is necessary because the fundamental 
characteristic of any social system is that its innumerable ele- 
ments are interdependent and interacting. No important 
action, therefore, has a simple consequence. Though a society 
is far more complicated than a family, the analytical problem 
may be illustrated by the example of a love affair between the 
man of one household and the woman of another. Let us 
suppose that there are two children from each of the marriages, 
that there are two divorces, and that the lovers marry and pro- 
duce two children. Their love affair has not changed merely 
their two lives; it has changed ten lives. And while the two 
lovers may by consulting their own feelings be able to determine 
what will be the consequences to themselves, they are not likely 
to know the consequences for the eight other lives that are 
intimately affected. 

The conceptual apparatus required for the successful analysis 
of a great society can perhaps be imagined by the mathematical 
logicians. But in the present state of human knowledge the 
apparatus is not yet perfected sufficiently to be used effectively 
by students of the social sciences, much less by public men. 
The time may come when the higher logic will have been 
sufficiently developed to enable thinkers to analyze the whole 
relevant social order, and from the analysis to predict success- 
fully the real, not merely the apparent and immediate, effect 
of a political intervention. 

Not until then will it be possible to contemplate a planned 
society consciously directed. It is not merely that we do not 
have to-day enough factual knowledge of the social order, 
enough statistics, censuses, reports. The difficulty is deeper 
than that. We do not possess the indispensable logical equip- 
ment the knowledge of the grammar and the syntax of 
society as a whole to understand the data available or to 
know what other data to look for. 


The ideal of a directed society requires, therefore, something 
much more than a proletarian revolution to fulfill it. It re* 
quires a revolutionary advance in the logical powers of men 
comparable with that which took place when they learned to 
use algebra or the differential calculus in the analysis of the 
physical world. In certain of the more recondite branches of 
mathematical economics we may perhaps have premonitory 
intimations of the modes of thought that may some day be 
developed to a point where the social order can be successfully 
analyzed. I do not know. I do not understand them. But 
at best they can be no more than intimations of what Pareto, 
who labored in this field, called an ideal goal which "as regards 
the economic and social sciences ... is almost never attained 
in the concrete." T 

Perhaps the intimations are promising; it may be that men 
have picked up a scent which, if followed bravely, will lead 
them to the quarry and give them a dependable understanding 
with which to control human society. But those who do not 
realize the distance that has yet to be traversed from our 
present abstractions to formulations which could be used as 
the policies of a state in reshaping the social order are like those 
who, having heard of Dr. CarrePs immortal piece of chicken, 
expect soon to find the serum of immortality on sale at the 
corner drugstore. 

Pareto added: "Unfortunately it [the hypothesis of interde- 
pendence] can be followed in but relatively few cases because of the condi- 
tions that it requires. Essential to it, in fact, is the use of mathematical 
logic, which alone can take full account of interdependences in the broadest 
sense. It can be used, therefore, only for phenomena susceptible of measure- 
ment * a limitation that excludes many many problems, and virtually all 
the problems peculiar to sociology. Then again, even when a phenomenon 
is itself measurable, serious* difficulties arise as soon as it becomes at all com- 
plex." The Mind *** Socisty, Vol. Ill, Sec. 1732, pp. 1 192-93. 


4. The Organization of Immobility 

Because of the limitations of our understanding and of our 
power, 'the dynamics of human capacity follow the rule that 
the more complex the interests which have to be regulated, the 
less possible is it to direct them by the coercion of superior 
authority. This is not the current view. It is generally sup- 
posed that the increasing complexity of the social order requires 
an increasing direction from officials. My own view is, rather, 
that as affairs become more intricate, more extended in time 
and space, more involved and interrelated, overhead direc- 
tion by the officials of the state has to become simpler, less 
intensive, less direct, more general. It has to give way, as 
we shall see later, 8 to social control by the method of a common 

Thus it is, I believe, a maxim of human association that the 
complexity of policy, as distinguished from law, must be in- 
versely proportionate to the complexity of affairs. For, while 
a few things can be directed much, many things can be ad- 
ministered only a little. 

The essential principle is clearly visible in the strategy of 
armies. If the campaign, let us say, of Colonel Lawrence in 
Arabia is compared with that of the Allies on the western front, 
it is plain that a war of movement is possible where there are 
small bodies of troops with light equipment > that as armies 
become larger and their equipment heavier, they lose the 
capacity for strategic manoeuvre and are reduced to creeping 
tactical attrition. Their inertia becomes so great that they can 
only press on in the direction they have started to go and wait 
grimly to see whether they can outlast the enemy. In the final 
stages all mobility may disappear: when the service of supply 
becomes so elaborate that it can just barely supply itself. At 

Ch. XIII. 



this point an army becomes stationary and can have no objective 
except to maintain itself wherever it happens to be. 9 

This principle of diminishing mobility with the increase of 
scale and complexity may be observed in all human organiza- 
tion. Mr. Henry Ford, for example, cannot change the de- 
sign of the cheap car which he turns out in mass as he can change 
the design of a car made largely by hand} the new tools needed 
to vary the design are too complicated and too expensive. But 
Mr. Ford can change the design more readily than can a manu- 
facturer who is immobilized by a great capital structure and 
a heavy load of debt. So, as industrial organization becomes 
bigger, it must become more inflexible, until in its last stages 
it is hostile to invention, enterprise, competition, and change. 
It is unable to consider any ideal except stability. 

This harrowing of objectives with increasing complexity is 
the phenomenon of bureaucracy. It is to be found in govern- 
ments and in corporate business, in armies and in churches and 
in universities. The more intricate the organization, the more 
it must renounce all other ambitions in order to perpetuate 

Thus it is no coincidence that the watchwords of policy in 
recent times should have been "Protection, stabilization, and 
security" of output, hours of work, processes, markets, 
wages, prices, and the quality of goods. Though it is com- 
monly believed that it was necessary to organize for stability 
against the "chaos" of competition, the truth is that it has become 
necessary to stabilize because organization has become so elab- 
orate. As modern nations adopted protection, assented to 
large-scale industrial organization, with heavy fixed capital 
charges and large overhead costs, with wages and hours rigidly 
established by law or contract, with rates and prices set rigidly 

f Cf. B. H. Liddell Htrft "Future Warfere," Atlantic Monthly, Dec. 


by government commissions or by monopolistic agreements, the 
objective could no longer be increased wealth through new in* 
ventions, new enterprises, and successful competition. The 
objective had to become stabilization at the existing level of 
productivity, variety, and economic technic. 

Thus it is that many have been persuaded that the import of 
cheaper goods is a menace, that technological progress is a 
disaster, that to produce more is to earn less. They have the 
conviction that if only they could close the ports of entry, if 
they could erect around their occupation a sufficiently high 
Chinese wall composed of holding companies, mergers, market* 
ing contracts, production agreements, licenses, quotas, labor 
laws and labor contracts, a wall high enough to exclude ne;w 
ideas, new methods, new men, and unusual labor, they would 
en joy 'the blessings of stability. No doubt it is true that a 
society which organizes itself elaborately must go on until it 
has organized itself into rigidity, that it must seek stability be- 
cause it cannot advance. It must imitate the mollusk, which, 
though it can neither walk, swim, nor fly, and has only meagre 
ambitions, does seem to enjoy a reasonably well-protected and 
stable existence. 

5. The Nemesis of Authoritative Control 

The generation to which we belong is now learning from 
experience what happens when men retreat into a coercive or- 
ganization of their affairs. Though they promise themselves 
a more abundant life, they must in practice renounce it; as the 
organized direction increases, the variety of ends must give 
way to uniformity. This is the nemesis of a planned society 
and of the authoritative principle in human affairs. 

It is not insignificant on the contrary it is a manifestation 
of the inexorable nature of things that the cult of the state 


as provider and savior should flourish in an era when the im- 
provement of the general standard of life throughout the world 
has been retarded and in many places reversed} that the worship 
df Caesar should be revived when there is a disintegration of 
political unions, an accentuation of regional, of clannish, of 
sectarian, of ethnic, and of national conflicts, a widespread as- 
sault on freedom .of inquiry and of debate, a frontal attack from 
many quarters on the very idea that the ihdividual has in- 
violable rights. 

These phenomena, every one of them the symptom of re-' 
gression to more primitive levels of social behavior, are not un- 
connected *with that principle of authoritative management 
Which has steadily taken possession of the thought, the actual 
policy, and the popular emotion of the modern world. Though 
it is the fashion to believe that because the progress of civiliza- 
tion has been arrested it is. necessary to make organization more 
elaborate and to redouble the impact of authority, the truth of 
the matter is that the alleged remedy for the trouble is the 
real cause of it. 

No doubt it is occasionally necessary to fight fire with fire 
by Uurning over areas in the path of the conflagration, or to 
dynamite one wing of a house in the hope of saving the rest. 
In this sense each nation may find itself constrained to raise its 
tariffs when its neighbors raise theirs, to direct or to subsidize 
one more industry because others are already being directed or 
subsidized. But it is a mistake to think that a man revolving 
in a vicious circle is an exemplar of progress, or that, having 
convinced himself that he must continue to revolve in it, he is 
the exponent of a novel and enlightened conception of human 

For more than two generations an increasingly coercive or- 
ganization of society has coincided with an increasing disorder. 
It is time to inquire why, with so much more authority, there is 


so much less stability ; v why, with such promises of greater abun- 
dance, .there is retardation in the improvement, in many lands 
a notable lowering, of the standard of life; why, when the 
organization is most nearly complete, the official idea of civiliza- 
tion is least catholic. The argument that it is "chaos" which 
compels the resort to authority cannot be true, even though in 
an immediate situation it may be the only remedy for a present 
evil, because, if it were true, the increase in coercive organ- 
ization during the past three generations ought to have brought 
some increase in stability. But actually the disorder is greater 
than when the remedy began to be adopted and there is, there- 
fore, an overwhelming presumption that it is coercion which is 
creating the chaos it purports to conquer. 

It is not a mere coincidence that the cult of a directed civ- 
ilization should be accompanied by a general foreboding that 
modern civilization is doomed. Why should it be that, in a 
time when men are making the prodigious claim that they can 
plan and direct society, they are so profoundly impressed with 
the unmanageability of human affairs? Is not the one mood 
the complement of the other? Is not their confidence inflated 
by despair, and their despair the deeper because of their pre- 

They find that the more they organize, the more general 
is the disorganization; the more they direct affairs, the more 
refractory they become. They find the directed society harder 
and harder to direct. For they have reached the point where 
the organization is too elaborate to be managed. The attempt 
to regulate deliberately the transactions of a people multiplies 
the number of separate, self-conscious appetites and resistances. 
To establish order among these highly energized fragments, 
which are like atoms set in violent motion by being heated, a 
still more elaborate organization is required but this more 
elaborate organization can be operated only if there is more 


intelligence, more insight, more discipline, more disinterested- 
ness, than exists in any ordinary company of men. This is the 
sickness of an over-governed society, and at this point the people' 
must seek relief through greater freedom if they are not to 
suffer greater disasters. 

6. The Great Schism 

These observations have their place in the argument because 
they are necessary to an understanding of that great schism in 
the human outlook which has shaken the world. The essential 
difference between the faith that our generation has embraced- 
and the faith that it has forsaken is to be found in what it thinks 
some men can do to manage the destiny of other men. The 
predominant teachings of this age are that there are no limits 
to man's capacity to govern others and that, therefore, no limi- 
tations ought to be imposed upon government. The older 
faith, born of long ages of suffering under man's dominion over 
man, was that the exercise of unlimited power by men with 
limited minds and self-regarding prejudices is soon oppressive, 
reactionary, and corrupt. The older faith taught that the very 
condition of progress was the limitation of power to the capacity 
and the virtue of rulers. 

For the time being this tested wisdom is submerged under a 
world-wide movement which has at every vital point the 
support of vested interests and the afflatus of popular hopes. 
But if it is true that men can do no more than they are able to 
do, then government can do no more than governors are able 
to do. All the wishing in the world, all the promises based on 
the assumption that there are available omniscient and loving 
autocrats, will not call into being men who can plan a future 
which they are unable to imagine, who can manage a civilization 
which they are unable to understand. 


The fact that the whole generation is acting on these hopes 
does not mean that the liberal philosophy is dead, as the col- 
lectivists and authoritarians assert. On the contrary, it may be 
that they have taught a heresy and doomed this generation to 
reaction. So men may have to pass through a terrible ordeal 
before they find again the central truths they have forgotten. 
But they will find them again, as they have so often found them 
again in other ages of reaction, if only the ideas that have misled 
them are challenged and resisted 




IN the realm of ideas a change in theory is reflected in practice 
only after a lapse of time and, as Mr. Keynes has said, the 
active men of an epoch are generally applying the theories of 
men who are long since dead. 1 Thus Adam Smith published 
The Wealth of Nations in 1776, and before his death in 1790 
two English Prime Ministers, Lord Shelburne and William 
Pitt, 1 had been converted to his ideas. Yet it was not until 
1846 that the Corn Laws were repealed, and the free-trade 
system was not established until Gladstone brought in his 
budgets of 1853 and 1860. 'This great reversal of policy was 
the outcome of a change in European thinking which took about 
seventy-five years to affect the policies of governments. 

In that period the liberal philosophy was in the ascendant: 
conservatives like Sir Robert Peel, and revolutionists as wefl/ 
thought of the future in terms of increasing emancipation from 
prerogative and privilege. Freedom was the polestar of the 
human mind. When there was an evil to be dealt with, men 
looked instinctively for its cause in some manifestation of arbi- 
trary power. They sought the remedy in the limitation of 
arbitrary power and the disestablishment of privilege. They 
believed in governments which were under the law, in the rights 

1 J. M. Keynes, The General Theory of Employment, Interest and 
Money, p. 383. "Practical men who believe themselves to be quite exempt 
from any intellectual influences, are usually the slaves of some defunct 
economist. Madmen in authority, who hear voices in the air, are distilling 
their frenzy from some academic scribbler of a few years back/ 9 

1 P. W; Hirst, Economic Freedom, p. 40. 


of man rather than the sovereignty of kings or of majorities. 
They held that the improvement of the human lot was to be 
achieved by releasing thought, invention, enterprise, and labor 
from exactions and tolls, from the rule of princes, monopolists, 
great landlords, and established churches. Though some, con- 
servative by interest and temperament, were opposed to drastic 
change, while others were in favor of radical reform, the 
conflict between them was whether existing privilege should 
be maintained or should be withdrawn. 

It may be said, I believe, that between, say, 1848 and 1870 
the intellectual climate of western society began to change. At 
some time in that period the intellectual ascendancy of the col- 
lectivist movement began. A phenomenon of this sort cannot, 
of course, be dated precisely, but it is fairly clear that after 1 870 
liberal philosophy was on the defensive in theory, and that in 
practice the liberals were fighting a losing rear-guard action. 8 
England, it is true, remained faithful to free trade until the 
Great War of 1914, but the protectionist doctrine grew every- 
where in popularity. In 1850 a liberal like Herbert Spencer 
believed that the next phase of social reform was an attack on 
thb great landed monopolies} as time went on he lost confidence 
and finally suppressed what he had written on the subject.* 
John Stuart Mill, though he never became an authoritarian 
socialist, did begin, toward the close of his life, to write on 
the assumption that the benefits of liberal philosophy had all 
been achieved and that the line of further progress was in the 
direction of collectivism. 

More than seventy-five years passed before the collectivist 
movement was dominant in actual affairs, but in this middle 
period of the nineteenth century it established itself in men's 

*Cf. A. V. Dicey's lectures on the relation between Law and Public 
Offaton in England during the nineteenth century. 
*Cf. Henry George's A PtrfUxtd Philosopher. 


thought. Both capital and labor became predominantly pro- 
tectionist. The older theory that incorporation is a privilege 
was abandoned and the way was opened to the corporate forms 
of business organization by the adoption of general incorpora- 
tion laws. Then, too, the conception of democracy changed. 
Once the popular movement had been chiefly concerned with 
the Bill of Rights and other limitations on the sovereign, but 
the rapid enfranchisement of the masses resulted in the belief 
that popular sovereignty must not be restrained, that the" mean- 
ing of free government was the dictatorship of the majority. 

Thus freedom ceased to be the polestar of the human mind. 
After 1870 or thereabouts men thought instinctively once more 
in terms of organization, authority, and collective power. To 
enhance their prospects businessmen looked to tariffs, to con- 
centrated corporate control, to the suppression of competition, 
to large-scale business administration. To relieve the poor 
and lift up the downtrodden, reformers looked to an organized 
working class, to electoral majorities, to the capture of the 
sovereign power and its exploitation in their behalf. Though 
great corporate capitalists continued to invoke the shibboleths of 
liberalism when confronted by the collective demands of the 
workers or the hostile power of popular majorities, yet they 
were thoroughly imbued with the collectivist spirit through their 
attachment to protection and to the concentration of control. 
The reformers and the labor leaders also continued to talk of 
liberty when their attempts to organize were resisted or their 
plans for regulation by the state were attacked, or when their 
agitators were put in jail for disturbing the peace. But in 
their belief that popular majorities must be unrestrained, in 
their persistent demands for the magnification of government, 
in their fundamental aim to dominate and possess and per- 
petuate the private collectivism of the corporate system, rather 
than to break up monopoly and disestablish privilege, they 


became the adversaries of freedom and the founders of a new 
authoritarian society* 

The contemporary world is so thoroughly imbued with the 
collectivist spirit that at first it seems quixotic to challenge it* 
Yet the prospects of reversing the mercantilist policies of Euro- 
pean states can hardly have seemed bright when Adam Smith 
wrote The Wealth of Nations; now we know that the zenith 

of those policies had been passed. The Ancien Regime was 


doomed, though Europe still had to pass through the wars 
and revolutions which marked its end. So it may well be to- 
day that the beginning of the end is at hand, that we are living 
at the climax of the collectivist movement, its promises already 
dust and ashes in men's mouths, its real consequences no longer 
matters of theoretical debate but of bitter and bloody experi- 
ence. For in the generation before the Great War, when it 
became the fashion to believe that all reasonable and enlight- 
ened men must be collectivists, no one had ever lived in a 
society regimented by an omnipotent state according to an offi- 
cial plan. But from 1914 to 1919 the western peoples had a 
taste of it under war conditions, and since then they have had 
the opportunity to observe the Russian, German, and Italian 
experiments. The easy confidence of the pre-war generation 
has now been shaken by grave doubts as to whether the col- 
lectivist principle is consistent with peace and prosperity or 
with the moral and intellectual dignity of civilized men. 

A reaction, definite and profound as that which in the late 
eighteenth century set in against the Ancien Regime, which in 
the nineteenth set in against the crudities of laissez-faire, has, 
I believe, already begun. But the popular and influential 
leaders of contemporary thought are in a quandary. Their 
settled convictions compel them to believe that a new and 
better order is being created in one or the other of the col- 
lectivist states $ their instincts and their observations tell them 


that the coming of this new society is attended by many of 
the symptoms of a relapse into barbarism* They do not like 
dictatorships! the concentration camps, the censorship, the forced 
labor, the firing squads, or the executioners in their swallow- 
tail coats. But in the modes of their thinking, the intellectuals 
who expound what now passes for ^liberalism," "progressivism," 
or "radicalism" are almost all collectivists in their conception 
of the economy, authoritarians in their conception of the state, 
totalitarians in their conception of society. 

Mr. Stuart Chase, for example, is a man of liberal instincts 
and democratic sympathies, but he tells us that in order to 
achieve abundance for all we must have "centralization of 
government; the overhead planning and control of economic 
activity. . . . The United States and Canada will fall into 
one regional frame; similarly most of Europe. Economically 
supreme over these frames must sit an industrial general staff 
with dictatorial powers covering the smooth technical [sic] 
operation of all the major sources of raw material and supply. 
Political democracy can remain if if confines itself to all tut 
economic matters . . ." (italics mine). 

Thus, though Mr. Chase is the enthusiastic sponsor of dic- 
tatorship on a continental scale, he would yet like to preserve 
the essentials of personal self-determination. The problem 
for him, as for all the collectivists of his school, is to reconcile 
the theory of a dictated economy with an instinctive revulsion 
against the behavior of active dictators. By some the recon- 
ciliation is achieved rather easily. They explain away the 
barbarism of the dictatorship they happen to admire while 
denouncing it manfully in all others. Thus sympathizers 
with the communist effort are profoundly moved by the Ger- 
man persecutions and the Italian deportations. But they have 

* Stuart Chase, of. cit. y pp. 312-13. Cf. alao George Soule, of. ci*.> 
pp. 214-15. 


an abiding faith that the Russian persecutions and deporta- 
tions have been exaggerated and misunderstood. Mr. Soule, 
for instance, holding up the Soviets as an example, says with 
what is apparently an untroubled conscience that the land 
and capital of Russia are administered by the Communist 
Party so "that all these things shall be used for the benefit 
of the whole population (except of those whom the Socialist 
State regards as enemies or useless persons, like statesmen, 
priests, private traders and private employers)." Others, who 
sympathize with the fascist effort, are certain that its brutali- 
ties are an unfortunate necessity in order to forestall the greater 
brutalities of a communist regime. By such casuistry as this 
men accommodate their faith in the collectivist principle to 
their recollection of what constitutes a civilized society. 

Apologists for both communism and fascism, then, are com- 
pelled to believe that the absolutism which they see at work 
in these promised lands is transitory; * that it is either an acci- 
dental blemish or only a temporary necessity. They are, I 
believe, greatly mistaken. A collectivist society can exist only 
-under an absolute state, a truth which Mr. Chase seems dimly 
to have appreciated when he said that "political democracy 
can remain if it confines itself to all but economic matters." 
In view of the fact, for example, that schools, universities, 
churches, newspapers, books, even athletic sports, require money, 

8 Cf., e.g., Engels's letter to Bebel (1875): "As the State is only a transi- 
tional institution which we are obliged to use in the revolutionary struggle, in 
order to crush our enemies by force, it is pure nonsense to speak of a free 
people's State. During the period that the proletariat needs the State, it needs it, 
not in the interests of freedom, but in the interests of crushing its antagonists, 
and when it becomes possible really to speak of freedom, the State as such will 
cease to exist." (Quoted in Lenin's State and Revolution, pp. 170-71. 
Vanguard Press, 1926.) Lenin gives a similar definition: "Dictatorship is an 
authority relying directly upon force, and not bound by any laws. The 
revolutionary dictatorship of the proletariat is an authority maintained by 
means of force over and against the bourgeoisie, and not bound by any laws." 
The Proletarian Revolution, p. 15. Communist Party publication, London. 


marketing, and have to have economic support, the realm of 
freedom and democracy which Mr. Chase leaves is about equal 
to nothing at all. That is why the absolutism that we see in 
Russia, Germany, and Italy is not transitory, but the essen- 
tial principle of a full-blown collectivist order. 

For in so far as men embrace the belief that the coercive 
power of the state shall plan, shape, and direct their economy, 
they commit themselves to the suppression of the contrariness 
arising from the diversity of human interests and purposes. 
They cannot escape it. If a society is to be. planned, its pop- 
ulation must conform to the plan; if it is to have an official 
purpose, there must be no private purposes that conflict with 
it. That this is the inexorable logic of the principle can be 
learned best by looking at what actual collectivists say and do 
when they are in power rather than by consulting the writings 
of sheltered revolutionists like Mr. Chase and Mr. Soule or, 
better still, Karl Marx, working in the British Museum. It is 
easy to make the best of both worlds while living safely in a 
regime of liberty} to let oneself become enchanted by the no- 
tion that the promises of the Providential State can be recon- 
ciled with the blessings of freedom. 

But when we come to the actual collectivists, a different note 
is sounded. The fascist conception of life, says Mussolini, 
"accepts the individual only in so far as his interests coincide 
with those of the state." Does communism accept the in- 
dividual on any other terms? Does it recognize any right 
to labor, to possess property, to think, to believe and to 
speak which does not coincide with the interests of the state? 
It cannot. The ultimate ideal, the practical goal, the ines- 
capable procedure of any full-blown collectivism, was an- 
nounced by Mussolini, who has been all kinds of collectivist 
in 'his time, when he said, "All in the State, nothing outside 
the State, nothing against the State." 



Thou shalt have no other gods before me. A political provi- 
dence is necessarily a jealous god how jealous will depend 
upon how far the state is impelled to go in directing the social 
order. Of course, the average humane collectivist T does not 
wish to go all the way to the totalitarian state. He does not 
wish to go too .fast or too violently to the point at which he 
would like to stop. That does not alter the fact that he has 
embraced a principle of social organization which has no other 
remedy for evil except to intensify overhead government by 
officials. For, unless the moderate collectivist believes that 
a little more official supremacy will end all important evils, 
how can he say when he proposes to stop? If he is right in 
thinking that the state can, by what Mr. Chase calls "the over- 
head planning and control of economic activity," remedy the 
disorders of mankind, then surely it would be cruel and be- 
nighted not to take full control and end all social evils. Though 
no doubt most collectivists in western countries hope to stop 
a long way this side of absolutism, there is nothing in the col- 
lectivist principle which marks any stopping place short of 
the totalitarian state. Their tastes and scruples are the sole 
checks on their principles, which in themselves are absolutist. 

And, worse than this, the application of those principles is 
cumulative in its effect. As long ago as 1884 * Herbert Spen- 
cer pointed out that "every additional state-interference 
strengthens the tacit assumption that it is the duty of the state 
to deal with all evils and secure all benefits" and at the same 
time there is a continually "increasing need for administrative 
compulsion and restraints, which results from the unforeseen 
evils and shortcomings of preceding compulsions and re- 

Spencer predicted that this tendency must lead to the trans- 

r Who reads Mr. Mnmford, Mr. Chase, Mr. Soole, for example. 
* The Man versus the State, p. 33. 


formation of industrial and quasi-popular regimes into "mili- 
tant communities" organized for "a state of constant war" 
under a "revival of despotism." * There may have been some 
doubt about that judgment in 1884. But now the course that 
Spencer predicted is unfolding itself before our eyes. Fifty 
years have passed since he wrote. During those fifty years 
there has been no stopping place in the progress of mankind 
toward ever-greater regimentation in ever-contracting soci- 
eties. There has been no point in the* expansion of tariffs, 
bounties, bureaucracies, inspectors, censors, police, and armies, 
no point in the contraction of markets, the disintegration of 
states, the disunion of ethnic groups no point at which the 
collectivists have been able to say: "Thus far and no far- 

How can they say so? The application of their principles 
creates such disorder that they* are never without warrant for 
redoubling the dose. Without abandoning their central doc- 
trine, hojv can they refuse to invoke the state as savior when 
there is obviously so much evil that should be remedied? 
They have no other principle they can invoke. Like the secret 
of some ancient art, they have lost the principles of freedom. 10 

They must not complain, then, if men look at Russia, Italy, 
and Germany to see where the cult of the state is leading them. 
There, in deeds visible to all, the idea is incarnate. 

9 The Coming Slavery. 
10 Cf. Bk. III. 


1. Their Necessary Absolutism 

THE regimes of authority have been established by armed 
bands who, by force or intrigue or both, have seized the co- 
ercive machinery of the state. This power they have used 
to imprison, terrorize, exile, or kill those who might be dis-r 
posed to dissent. They have extirpated all organs of repre- 
sentation such as elections, a free press, voluntary assem- 
bly through which dissent might be encouraged and could 
express itself. To the innocent in foreign lands all this is ex- 
plained as unpleasant but necessary: as transitory measures 
in an emergency, like the martial law which, in a free com- 
munity, might be declared after an earthquake. The implica- 
tion of the argument is always that eventually constitutional 
government will be restored, and with it the right to dissent. 
But while this explanation is offered to foreigners whose feel- 
ings have to be placated, the plain truth is that the "transition'' 
is never completed and can never be completed while the regime 
lasts. 1 

The authoritarian collectivists, when they are grounded in 
their principles and candid with themselves, know quite well 
that the right to dissent can never be restored without renounc- 

l This passage was written before the Russian Constitution of Dec. 5, 
1936, was promulgated. I see no reason for altering the view that the 
right to dissent will not be restored while the regime of planned collectiv- 
ism endures. The revival of liberty might take place in Russia but only 
as the planned economy is demobilized. Of. Ch. VI. 


ing their principles and destroying their social order. When 
they speak of liberty, as they occasionally do, what they mean 
is that they hope eventually to train their peoples to desire 
only what the state desires, to have no purposes but the official 
purposes, to feel free because they have become habituated to 
conform. "Far from crushing the individual, 11 says Musso- 
lini, a the Fascist State multiplies his energies, just as in a 
regiment a soldier is not diminished but multiplied by the num- 
ber of his fellow soldiers." 2 But obviously, whatever the 
individual may gain by being a member of a regiment, he loses 
his right to dissent, to object to the strategy of the generals 
or the tactics of the officers; he is deprived of all possibility 
of having something to say about what he will live and die for. 
Only when he has lost the will to dissent can he find in the 
regimental discipline a more perfect freedom. In this sense 
only can freedom obtain in a totalitarian state: that when there 
is no more opposition, it will no longer be necessary to crush 
the opposition; that a perfectly obedient people would not have 
to be governed ruthlessly. 

In this sense only can the collectivist regimes ever bring to 
an end "the transitional" violence of the concentration camp, 
the secret police, and the censorship. The emergency never 
ends: the transition cannot be completed until everyone is a 
fascist or a communist by instinct and indurated habit. For 
a government cannot shape the destiny of a society unless its 
members assent to its plans an4 conform with them. As in 
Mussolini's regiment, they must think, when they think, as 
their officers think, and they must have the emotions which 
the plan of campaign demands. Given the premise that a 
society is to be planned and directed by authority, by "the 

2 Michael T. Florinsky, Fascism and National Socialism, p. 63. Marx 
and Engels described socialism as "a realm of freedom," meaning that society 
would be free to direct production, not that individuals would be free to 


overhead planning and control of economic activity," the con- 
clusion is correct. The dissenters must be eliminated because 
they are insubordinate; they interfere, to quote Mr. Chase again, 
with "the smooth technical operation" of the economy. The 
rank and file must be drilled until, as Hitler says, they recog- 
nize <( the absolute authority of the leaders over those below." 
The syllogism is perfect: Those who look to the state as di- 
rector of society must abolish the diversity and contrariness 
of human purposes. And if they are not to rely forever on 
sheer physical coercion, they must put their trust in some 
supplementary method of producing unanimity among their 

Thus all collectivist systems must and do implicitly assume 
that plurality of interests, which actually exists everywhere, 
is evil and must be overcome. They speak of the chaos and 
the confusion of the free regimes and feel inspired to eliminate 
"the interaction of all the numerous private interests" * of in- 
dividuals, groups, and classes, of local and regional communi- 
ties. Collectivists are profoundly monistic in their conception 
of life, because they regard variety and competition as evil. 
They look upon the state, not as the dispenser of justice among 
the various interests of men, for the idea of justice in- 
volves a recognition of variety, but as the creator of a unity 
in which variety of interest will have disappeared. So while 
in free societies opposition is a constitutional function, in au- 
thoritarian societies it is treason. Thus the collectivist ideal, 
as Mussolini has correctly discerned, is realized most com- 
pletely, not in a family, or in a partnership, or in a market, or in 
a university, or in a church, but in a regiment of well-disciplined 
troops. For it is in a regimental organization of human 
beings that everyone's labor, everyone's time, and at last 
everyone's life, are at the disposal of the supreme commander. 
. 215. 


So the crucial problem presented to the theorists of collectiv- 
ism is how to eliminate the obstinate variety and contrariness 
of mankind. They realize that terrorism, however effective 
for a while, is revolting and cannot be sustained forever; no 
regime can be vigilant enough in perpetuity to crush opposition 
wherever and whenever it arises. There are instances, to be 
sure, of despotisms which endured for centuries. But the ex- 
periment has never been tried in a population that has known 
freedom and is accustomed to a fairly high standard of life. 
Moreover, the ancient despotisms were established by conquest, 
whereas the new ones, at least up to the point where a coup d'etat 
is practicable, have to rely upon conversion. The collectivist 
doctrine is obliged, therefore, to provide some kind of plausible 
formula which promises to abolish conflict in society* 

2. The Fascist Paradox 

The fascist version of the collectivist principle is less explicit 
than the communist.* For while the communist doctrine has 
an intellectual history which ascends to the very earliest known 
speculation about the state, fascism, though it is also an ancient 
doctrine, has disguised its ancestry by adopting a very new 
ideology. There is no literature of fascism comparable in 
erudition or in pedantry to the literature of Marxism; there 
are only the speeches and tracts of agitators and the works 
manufactured by propaganda ministries. The fascist doctrine 
has been hastily improvised since the World War, and it has 
never been elaborated, as the communist doctrine has been, 
by men who could speculate and investigate at their leisure, 
criticizing and refining their theories under the conditions of 
freedom obtaining in capitalist democracies. 5 

4 Cf . E. B. Ashton's The Fascist: His State and His Mind, p. 1 7. 
'Karl Marx wrote Das Kafital in the British Museum during the as- 
cendancy of the liberal tradition. 


The fascist theory has been hastily assembled out of such 
scraps of learning as happened to remain in the minds of men 
like Mussolini and Hitler who spent their days making speeches, 
hatching conspiracies, and organizing their adherents. Thus 
it is an absurdity to speak, for example, of Vilfredo Pareto as 
the Karl Marx of fascism. For Pareto was a free trader in 
his economics and an inveterate liberal in his hatred of inter- 
ference with morals and culture, and his book ends with a 
portentous warning against that "byzantine" conception of so- 
ciety to which fascism and the so-called corporative states 
are returning. 

It is from the behavior of the fascists that the fascist 
remedy for human variety has to be deduced. The panacea 
would appear to be propaganda, drill, and education. Fas- 
cists make the assumption, never wholly explicit nor com- 
pletely stated, that there is only a marginal willfulness in 
human behavior; that the great mass of mankind is naturally 
docile; that, by exterminating the minority and drilling the 
mass, significant dissent will disappear. Hence the claim of 
the fascist states to an absolute monopoly of all agencies of 
education, intelligence, and culture. For without such a mo- 
nopoly they could not protect the mass, whom they propose to 
discipline into unanimity, from the contagion of individual 

That the fascist reliance is upon the drilling of the mass is 
evident from the fact that they propose to evolve the perfectly 
harmonious 'and heroic nation of the future out of the dis- 
cordant and ordinary human stock which happens to inhabit 
the territories they govern. It is true that the German Na- 
tional Socialists talk much about blood and race. But except 
for sterilizing the hereditarily unfit, segregating and persecuting 
persons whose grandparents are known to have been Jews, 
they have to breed the future race out of the Germans who 


live in Germany. Considering the fact that these Germans are 
legally assumed to have the proper ancestry if their forbears 
before the year 1800 are unknown to them, it is manifest that 
the racial theory is a political fiction employed to make the 
Germans feel that from the creation of the world they have 
been as unanimous as the Nazis would like them to become. 
The Italian version of fascism confines its eugenic activities 
to increasing the birth rate, having never been tempted in 
an old and skeptical civilization to ask anyone to believe that 
the mixture of strains in the Italian Peninsula is a distinct bio- 
logical species. Thus the Italian fascists have recognized rather 
more clearly than the German National Socialists that they are 
not breeding a new race but are merely trying to recondition 
an old community. 

The preliminary step in the operation is- to create about the 
fascists of the future a sterile area through which dangerous 
ideas cannot penetrate, to select with the greatest care the ideas 
and information which may be administered, and then to 
habituate their subjects to the official doctrine by continual and 
vehement repetition. 8 Nothing quite like this has ever been 
attempted before. Children have been trained by these meth- 
ods, novitiates in religious orders, and, of course, soldiers. 
There have been, too, many governments which tolerated no 
dissent. But never before have large populations, used to 
reading newspapers, been taken in hand by the state with the 
intent not merely to influence their current opinions but to re- 
fashion the whole character of their minds and spirits. Fascism, 
says Mussolini, "demands remaking not the forms of human 
life, but the contents 5 maji, character, faith. And to this end 
it demands a discipline and authority which descends within 
the spirit and then dominates unchallenged." T 

f Cf . Aldous Huxley's Brave New World. 

' Cf. Article on Fascism, Italian Encyclopedia, p. 848. 


It is one of the most curious experiments ever undertaken: 
the attempt, in an age when the means of communication have 
been stupendously magnified, to control by government bureaus 
all the organs of intelligence in order to remake man, char- 
acter, faith. The German experiment, except to those who 
are its victims, is particularly interesting, and, like the offer 
of a strong man to let himself be vivisected, should make a 
great contribution to political science. For the Germans are 
the most gifted and most highly educated people who ever 
devoted the full strength of a modern state to stopping the ex- 
change of ideasj they are the most highly organized people 
who ever devoted all the coercive power of government to the 
abolition of their own intellectual life; they are the most 
learned people who ever pretended to believe that the prem- 
ises and the conclusion of all inquiry may be fixed by political 

The success of the experiment would seem to depend upon 
the fulfillment of a paradox. All Germans must sink into 
docile but eager resignation, accepting the decisions of the 
Ftihrer as the fellah accepts the will of Allah; and then out of 
this conforming mass must arise brilliant, adventurous, and 
supremely intelligent leaders. It should be remembered that 
while the National Socialists lay great emphasis upon obedience 
they also extol the principle of leadership, recognizing quite 
correctly that the German economy, the German army, and 
the German state cannot be administered by routineers. They 
know that to sustain so large a population on so poor a soil 
requires exceptional foresight, inventiveness, enterprise, and 
technical competence. So a population is dogmatically drilled, 
its curiosity is frustrated, it is forbidden to examine the prem- 
ises or the conclusion of the official dogma, it is unable to ex- 
change ideas at home or abroad and then it is called upon 
to produce leaders. This is the most puzzling paradox of 


the Nazi philosophy. For the principle of leadership is highly 
individualistic. It presupposes the continual emergence of re- 
sourceful men; but the principle of absolute collective con- 
formity from birth to death would hardly seem calculated to 
develop and select them. 

It is easy enough to understand how temporarily convenient 
jthe paradox is to the prevailing dictators. The principle of 
leadership justifies their own arbitrary powers and the prin- 
ciple of obedient conformity justifies their denial of power to 
anyone else. But since, according to Hitler's own assurances, 
National Socialism is to last for a thousand years, the problem 
of how new leaders are to be recruited is a serious one for 
those who take seriously the aspirations of the Nazis. Ger- 
many to-day is, of course, ruled by soldiers, bureaucrats, and 
industrialists who were educated and selected before the Nazi 
revolution. They may profess National Socialism but they 
are not the products of National Socialism. If the ideal is 
ever to be tested fairly in practice, the regime must last until 
Germany is ruled by men who have known no other discipline 
except that which the Nazis provide. That would require 
at least two generations. For even the Nazi children to-day 
are being reared by parents and teachers who hav6 the unre- 
generative mentality of the pre-Nazi era. The reconditioning 
of the German nation cannot be said to have been fully begun 
until the Nazi sons of Nazi parents rule Germany. 

Yet the problem of creating a resourceful governing class 
out of an intellectually sterilized population would seem to 
be insoluble as long as the fascists continue to adhere to one 
of the cardinal principles of the democratic regime which 
they so thoroughly despise. This is the principle of equal 
opportunity even if the equality is restricted to certified 
Nazis; for this remnant of liberalism leaves careers open to 
talent, and it supposes that masterful leaders can be se- 


lected out of the conforming mass of corporals and house- 
painters, blacksmiths and journalists. 

If the system is to work, if leadership is to be-combined with 
the conformity of the mass, the only practicable solution would 
seem to be an hereditary governing caste* For then it would 
be theoretically possible to keep the people intellectually iso- 
lated, sterile, and obedient, and yet to give to the hereditary 
rulers a genuine education. Without such a division of the 
nation into castes it will be necessary to afford everyone approxi- 
mately the same cultural opportunities: if the opportunities are 
varied enough to train and select leaders, they will encourage 
what the Japanese call "dangerous thoughts" in the massj 
if they are meagre enough to keep the people docile, they will 
be insufficient to produce leaders. Therefore, unless the fas- 
cists renounce the liberal conception of universal education and 
equal opportunity, they will lack leaders or they will destroy 

So they must have the courage of their despotism and return 
in this respect, as they have in almost all others, to the ancient 
practice of all despotism, which is to provide one kind of edu- 
cation for the subject and another for the ruler. The caste 
must be hereditary. For if the fascists attempt to select prom- 
ising youths for special training, it may be too late to develop 
their promise. There is no sure way of detecting the capacity 
for leadership early enough, and they would be in trouble 
when they attempted to say that the son of a high Nazi official 
was not fit to be educated for leadership but the corporal's 
child was fitted to head the state. Unless the leaders of the 
future are designated at birth, they cannot be specially trained 
in those very qualities which fascism must discourage in the 
mass whom the leaders are to lead: since little boys are not 
born with a certificate of leadership, the only way to designate 
the future leaders is to make leadership hereditary, and thus 


carry to its necessary and logical conclusion the doctrine that 
all human rights and virtues are biologically predetewnined. 

.Though this is the only practicable solution of the fascist 
paradox, there is one fatal objection to it. It re-creates that 
very diversity in society which the fascist doctrine promises to 
eliminate. Between any ruling caste and its subject mass there 
would be some conflict of interest. How much, how severe, 
would depend on how perfectly the ruling caste had condi- 
tioned the people and how wisely it ruled them. But, enjoying 
a privileged position, the caste would be tempted to defend 
its privileges, perhaps even, if it were human, to enhance 
them, and unless the drillmasters and propagandists are 
miracle men envy, the longing for more equal opportunity, 
the sense of injustice, would produce popular discontent. 
Once more it would be necessary to define conflicting rights 
and to adjust diversity of interest. 

The truth is there is no formula anywhere in the fascist 
doctrine which even suggests how its social ideal could be 
realized. It seeks two inherently incompatible results: great 
leaders and a conforming nation. If it devotes itself to pro- 
moting conformity, it will not produce leaders. It will pro- 
duce routineers, bureaucrats, and courtiers. If it devotes it- 
self to producing leaders, it will destroy the conformity of the 
mass. If it establishes an hereditary ruling caste, it might 
produce enterprising leaders and docile subjects. But it would 
then have returned to that class division in society which is ir- 
reconcilable with its ideal of unanimity and national solidarity, 

3. The Fascist Reality 

Although the inherent contradictions of the doctrine prove 
it to be a fantasy, the mystery of fascism dissolves once we adopt 
the hypothesis which both Mussolini and Hitler offer in ex- 


pknation of their policies when they are not possessed by an 
ideological fervor. It is the simple hypothesis that they lack 
the physical resources to maintain their populations at a de- 
sirable standard of life and that they must conquer new places 
in the sun. This makes the whole fascist system and ritual 
easily intelligible, and all aspects of it, so strange when con- 
sidered as a method of social reconstruction, are suddenly rec- 
ognizable as perfectly familiar phenomena. 8 

Thus there is no doubt that the fascist revolutions were 
preceded by a severe class struggle in which the workers and 
peasants were threatening gradually to expropriate the indus- 
trial capitalists and the landlords* There is no doubt, too, 
that the devastation of the World War and the subsequent 
failure to restore the international economy intensified the 
struggle to the point where it was almost unmanageable. Both 
Italy and Germany are peculiarly dependent upon the outer 
world for necessary materials. They were unable to buy what 
they needed in sufficient quantity by the sale of their exports. 
In both countries there was a diminishing national income, and 
a class struggle to share it. The contrast between their situa- 
tions and that of the creditor nations possessing ample re- 
sources at home or empires abroad was striking enough, and 
both peoples became imbued with the idea that if they did not 
obtain access to greater opportunities they would be destroyed 
by civil war. With tariffs rising everywhere to impede their 
exports, dependent upon precarious and, as the event proved, 
capricious international credits, they felt wholly insecure. 
Rent by struggle at home, their standards of life sinking, un- 
able to obtain substantial concessions abroad, they became pos- 
sessed of the idea, as Hitler put it, that they must fight "tre- 

9 In saying this I am not intending to imply that the Italians and Ger- 
mans are in fact crowded because they do not govern enongh territory or 
that their difficulties can be overcome by conquering empires. I am merely 
saying that they act on this hypothesis and that it explains the two regimes. 


mendous battles for the existence of mankind" and that "in the 
long run only the passion for self-preservation can win a last- 
ing victory." * 

There is no mystery in fascism, once its pretensions to being 
a universal formula of social reconstruction are put aside, and 
it is recognized as the elaborate and intense militarization of 
a people for a war of conquest. Fascism is martial law, and 
there is no essential feature of fascism that Is not a familiar 
phenomenon injuiy highly organized nation when it goes to 
war. Only by failing to see fascism as a mobilization do these 
regimes seem novel or unintelligible. It has taken some time 
to recognize fascism for what it is. Men have not seen a 
mobilization lasting many years, preceding any declaration of 
war, preceding even a clear decision as to when the war was 
to be declared or against whom. Outsiders have been bewil- 
dered by the appearance of a war mentality and the taking 
of war measures without actual battles. But once it is under- 
stood that fascism is preparation for war, the unfamiliarity 

All the phenomena of a nation at war are reproduced. 
Strikes and lockouts are ruthlessly suppressed as treason against 
the safety of the nation. Hatred is fanned to a white heat. 
Ruthlessness is exalted. Pacifism and humanitarianism, as 
Hitler says, are treated as "a mixture of stupidity, Cowardice, 
and superciliousness" j only the martial virtues are officially 
approved and the people are taught, as Mussolini has said, 
that <c war alone brings to its highest tension all human energy 
and puts the stamp of nobility upon the people who have the 
courage to engage in it." Some persecution is necessary in 
time of war: it enables the noncombatants to feel that they are 
at war with someone $ it hardens the heart of the people, like 

*Mein Kampf, pp. 148-49. (Munich, 1933 ed.) Cited in Ftoriniky, 
of. cit. 9 p. 73. 


philosophical, and other conceptions of each "historical period.' 9 " 
Human nature should be remolded, therefore, not by propa- 
ganda, hit by socialization of the means of production. 

The communist thesis is that if property used in the produc- 
tion of wealth were collectively owned, and were administered 
without personal profit to themselves by public officials, the 
social antagonisms in society would disappear. For it is sup- 
posed that the antagonisms originate in the private ownership 
of productive capital, that this is the bone of contention, that 
all important social conflict is provoked by the fact that pro- 
ductive capital is privately owned. If this is true, then a 
harmonious and unanimous society should appear when pro- 
ductive capital has been socialized. The continuation of the 
dictatorship, the terror, and the propaganda may thus be ex- 
plained away on the ground that the process of socialization is 
not yet complete and that the capitalists who still hope to re- 
cover their property are not yet dead." 

But if it is true, as the Communist Manifesto proclaims, that 
"the history of all hitherto existing society is the history of class 
struggles," what reason is there for believing that the history 
of all future societies will not also be the history of class strug- 
gles? Yet the Marxian interpretation of history avers that 
the method of social progress which has always prevailed will 
come to an end with the establishment of socialism. Then 
evolution, as the human race has known it, is to cease. And 
then what? It is not easy to say. The Marxian canon does 
not say whether socialism is to be static once it is established, or 
whether it is to evolve according to some wholly new and alto- 

10 Herr Eugen DQhrings Revolution in Science, p. 32. 

11 "The proletariat needs the State, the centralized organization of force 
and violence, both for the purpose of crashing the resistance of the exploiters 
and for the purpose of guiding the great mass of the population the peas- 
antrj, the lower middle class, the semi-proletariat in the work of economic 
Socialist reconstruction." Lenin, of. cit., p. 133. 


gether undefined dynamic principle of its own. All that the 
Marxians say is that other social systems have evolved by class 
struggle. But whether socialism itself is to evolve, and if 
so how, is not explained in their philosophy. 

Yet this is a crucial question if credence is to be given to 
their promise that, after one more supremely great class war, 
peace will prevail. For myself, I can find no reason, on the 
Marxian hypothesis, for thinking that social and international 
peace will be any easier to achieve after the revolution than 
before: For what was it, according to the hypothesis, that 
caused capitalism to evolve out of feudalism? It was the in- 
vention of a new technology for the production of wealth." 
The entrepreneurs who organized this new system of produc- 
tion then displaced the feudal nobility as the masters of gov- 
ernment and of the policy of the state. This theory stipulates, 
therefore, that a new technology will call into being a new 
ruling class and that this new class will then overthrow the 
older ruling class with its antiquated technology. Now pre- 
sumably invention will not stop under socialism, and still newer 
technologies are, therefore, to be expected. But for some 
reason the Marxians believe that after socialism the new tech- 
nologies will not call into being a new class whose interests 
conflict with the interests of those who still live by the more 
antiquated technology. 

What reason is there for thinking that until socialism "a 

11 "The materialist conception of history starts from the principle that 
production, and with production the exchange of its products, is the basis 
of every social order; that in every society whfch has appeared in history 
the distribution of the products, and with it the division of society into 
classes or estates, is determined by what is produced and how it is pro- 
duced, and how the product is exchanged. According to this conception, 
the ultimate causes of all social changes and political revolutions are to be 
sought, not in the minds of men, in their increasing insight into eternal 
truth and justice, but in changes in the mode of production and exchange; 
they are to be sought not in the fhilosofhy but in the economics of the epoch 
concerned." Engels, of. tit., p. 294. 


history iias existed" but that after socialism "none exists any 
longer"? 1 * Surely a good Marxian determinist ought to hold 
that a conflict between an older and a newer technology will 
always produce a class struggle between the beneficiaries of the 
two systems. But the Marxians deny that this will happen 
once all the means of production are collectively owned and 
administered by the state. Their assumption is that the tran- 
sition from one mode of production to another will then take 
place without a struggle. Why should it? Let us suppose 
that scientists invent a method of developing energy from 
salt water, and that the new power machines are as much su- 
perior to our present power machines as dynamos are to wind- 
mills. At once the productive capacity of peoples living near 
salt water would become immensely greater than that of peoples 
living in the interior of great continents. The prosperous in- 
dustrial regions will be at the seashore. Italy, with its long 
coast line, would have greater natural resources than Russia 
with all its minerals. 

Now if we are to suppose a socialist commonwealth embrac- 
ing the whole world," the regions adapted to the new tech- 
nology will enjoy a far higher standard of life than the land- 
locked regions. Are we then to suppose that the supreme 
socialist world government will be able to equalize this gross 
disparity, that it will be able to expropriate the economic rent 
of the favored communities along the coast in order to pass 
it on to the backward populations, or that it will be able to 
transplant these populations to the sea coast? To suppose that 
the World Soviet could do that, and do it with such perfect 
authority and justice as to obviate the resistance of the priv- 

11 Das Elend der Philosophic. Marx used this phrase in attacking an 
opponent. The quotation is from Ludwig von Mises's Socialism, p. 287. 

14 This is what the doctrinaires do suppose. Cf ., e.g., Harold J. Laski's 
The State in Theory and Practice, p. 223: "An international society re- 
quires economic world-planning." (In* 1 : Gnrge Allen & Vnwin Ltd.} 


ileged masses against the influx of the unprivileged, is to be- 
lieve in a whole series of miracles. It is to believe in the 
existence of men capable of administering the affairs of the 
whole world. It is to believe in the voluntary acceptance of 
their rule by the whole population of the globe. It is to believe 
in their omnipotence and in their omniscience. It is to believe 
not in human government but in a Providential State. 

Now the example may be unreal in the sense that machines 
for making power from salt water may not be invented. But 
the example illustrates, in an extreme form to be sure, the kind 
of technological change which has in fact caused so many revolu- 
tions in human society. Certainly no Marxist believing in the 
materialist interpretation of history could deny the immense 
effect on the distribution of peoples, on relative standards of 
life, on the rise and decline of communities, brought about by 
the development .of energy from coal, and then from oil and 
from falling water. But why should a Marxist suppose that 
in the future an all-powerful and all-wise state can somehow 
abolish the revolutions wrought by technological change? Is 
it not plain that the Marxist who thinks class struggles will be 
abolished in the socialist state is simply abandoning his "science" 
at the threshold of socialism, and that thereafter he relies on the 
state as deus ex machina? That he is in effect saying that the 
socialist statesmen of the future will be able to do what by his 
own hypothesis no statesmen of the past could possibly have 

By what process of reasoning, we may ask, is the communist 
able to persuade himself that the statesmen of the future will 
possess this unprecedented foresight, wisdom, authority, and 
disinterestedness? Simply by allowing himself to believe that 
the root of all evil is in the private ownership of the means of 
production. The theory assumes that, but for the corrupting 
effect of private property and capital goods, men are now capable 



of "world economic planning" for an otherwise sweetly reason- 
able human race. All the faculties required (or Utopian states- 
manship are assumed to exist, ready for action, needing only to 
be released from the corruption of private property. For it is 
by a revolution in the ownership of property that this revolution 
in human behavior is to be effected. 

To hold this theory is not only to take a very naive view of 
human behavior, extraordinarily naive in men who deride ideal- 
ism and pride themselves on being tough-minded; to hold this 
view is to have a crudely naive conception of the nature of 
property. The Marxist, curiously enough, builds his hope 
for the supreme reasonableness of society upon an ultra-legalistic 
notion of property. At bottom he identifies property not with 
the control, and use of capital goods but with the residual title 
deeds, and he assumes that if all the titles are collectively held, 
the instruments of production will necessarily be collectively 
"owned" and administered. 

This is the crucial point in the socialist argument: the whole 
hope that exploitation, acquisitiveness, social antagonism, will 
disappear rests upon confidence in the miraculous effect of the 
transfer of titles* It is this transfer, and only this transfer, 
which is to revolutionize human behavior, is to enhance beyond 
all known experience the human capacity to govern, and is to 
terminate once and for all that history which "in all hitherto 
existing society is the history of class struggles." The socialist 
does not say that under socialism diversity of interest is to be 
more successfully adjusted. He says that when the titles are 
collectively held, diversity of interest will have been abolished. 
He does not say that socialist statesmen must learn to plan and 
administer the economy of the world; he says that when the 
titles are collectively held, the statesmen will plan and admin- 
ister the economy of the world. 

There is for the socialist only one social problem, and it is 


easily solved by the transfer of the title deeds. I know that 
socialists will deny that their doctrine rests on such a simple 
formula. But I must insist that that is the formula on which 
it does rest. There is no socialist technology, there is no 
socialist plan for the production and distribution of wealth: all 
the problems in these realms remain to be solved by the socialist 
officials of the future. There is nothing in the Marxian 
canon from which the Russian Soviet officials were able to "deduce 
one single guiding principle for the formulation and the 
administration of the Five- Year Plan. Socialist theory pro- 
vided no clue whatsoever which told them what to produce, how 
much to save for capital investment, what wages they should 
pay, what hours of labor they should require, what prices they 
should charge. All of that they had to decide without benefit 
of Marxism. The only principle which they derived from their 
doctrine was that the residual title to property in land and 
capital goods was to repose in the state. 

The supposition is, of course, that if the residual titles are 
collective, the whole planning and administration of the econ- 
omy will be done in reference not to the profits of private 
owners but to the welfare of the whole community. But that 
is a non sequitur which springs from the fallacious assumption 
that the residual owner of the property is necessarily the chief 
beneficiary. It is astonishing that socialist theorizing should 
have fallen into this error. The residual owner of all the 
land of England is the King. Does that mean that the lands 
of England are administered for his benefit? The residual 
owner of the army and navy is the nation. Does that mean 
that the armed forces have necessarily acted only for the good 
of the nation? The residual owners of great corporations 
are the owners of equity shares. Has that meant that all cor- 
porations are necessarily conducted for the benefit of the share- 


Collective property can readily be administered for the bene- 
fit of a class. There is ng magic in title deeds. There is 
nothing in the act of transferring the ownership of productive 
capital to the community which offers any guarantee what- 
ever that the official managers will not enrich themselves and 
exploit the community. On the contrary, collective owner- 
ship is entirely compatible with the division of society into 
hereditary or appointive castes. What is there in the prin- 
ciple of collective ownership which precludes a distribution 
of income in which the political administrators take the lion's 
share? There is nothing, and anyone who thinks there is 
should read Plato's design for a communist society composed 
of stratified social classes. 

Surely it is plain that to vest the legal title of residual owner- 
ship in the community has no necessary connection with the 
beneficial use of the property by the whole community. If 
it did, there would be no such thing as militarism in armies, 
as bureaucracy in government departments, as profiteering by 
corporate officials and controlling minorities, as favoritism and 
patronage in the public services, as legalized raids on the pub- 
lic treasury. It is because soldiers, who do not own the army, 
develop special interests of their own that we have the phe- 
nomenon of militarism. It is because officials use the govern- 
ment service as a vested interest, though they do not own it, 
that we have the phenomenon of bureaucracy. It is because 
corporate officials and. financiers and minorities use corporate 
property for their own benefit, though the residual owners are 
the shareholders, that we have the phenomenon of corporate 

None of these evils is prevented by the fact that the bene- 
ficiaries do not possess the title deeds. The legal tide does 
not even indicate how the property is to be administered for the 
beneficial advantage of the residual owners. Yet the whole 


promise of socialism rests on the assumption that property held 
in trust for others will be administered faithfully and wisely 
in their highest interest. Though it is evident from all experi- 
ence that there is no .warrant for this assumption, though it 
is evident that property held in trust is not necessarily admin- 
istered in the highest interest of the residual owner, the 
socialist naively argues that if all property were held in trust 
for all the people, all property would as a matter of course be 
administered in their highest interest* 

And what is the communist conception of how collective prop- 
erty should be administered? There is a "socialist" formula, 
declared in the present Russian constitution, 15 which is "from 
each according to his ability, to each according to his toil." 
But this is regarded officially as a transitional formula to the 
true communist principle: "From each according to his ability, 
to each according to his needs." But how are "needs" to be 
determined? Since inequality has, on the Marxian premise, 
provoked all class struggles, the answer must be that the "class- 
less" state will be one in which there is nothing to struggle for. 
The communists are driven to the notion that only if worldly 
possessions were "equally" distributed would men cease to 
struggle for more than their allotted share. 

The whole promise of communism that it can end class 
war, imperialism, national war, personal acquisitiveness and pos- 
sessiveness rests upon two suppositions: that equality of re- 
ward can be calculated and administered, and that it will be 
acceptable. So the correct way to state the communist theory 
is not that it means to abolish the private ownership of produc- 
tive capital, that is merely the means to the end, but that 
it promises to administer productive capital according to the 
principle of "equal" rewards. 

The fulfillment of this promise is, of course, conditional upon 

10 Ch. I, Article 12. 


the ability of the rulers of a communist state to define equality 
in actual practice, to administer the economy by offering equal 
rewards, and to discourage, suppress, reeducate, and, if necessary, 
exterminate those who demand more than an equal reward. 

Now it is no easy problem to deduce from the general prin- 
ciple of equal rewards the criteria by which they can be de- 
termined* I use the word "rewards" because it is evident that 
the hypothesis could not be satisfied if all incomes derived from 
useful labor were equal in terms of money. Identical money 
wages would merely enhance the desirable advantages of in- 
equality in other tEings. In an army all private soldiers are 
paid the same wage, but it makes a vast difference to the soldier 
whether he is paid for service in the front-line trenches or for 
being the chauffeur of the minister of war. It must be obvious, 
particularly to communists who pride themselves on having a 
realistic appraisal of human selfishness, that only total and ab- 
solute equality of reward could, according to their theory, end 
the struggle for privilege. The total satisfactions, the real 
income, measured not only in money, not only in goods, but 
also in* place, power, repute, safety, adventure, interest, relief 
from monotony, would have to be so equally divided that no 
one would wish to have any other job than the one which 
is open to him. 

But though the communist diagnosis demands it, equality in 
this sense cannot be defined in theory or arranged in prac- 
tice. The reason is that equality of reward has only a sub- 
jective meaning, whereas wage schedules, occupational re- 
quirements, the recruitment of labor, and the selection of 
managers and officials are objective derisions. The two cannot 
be reduced to a common denominator. Thus if money incomes 
are equal, how shall the pleasure and pain of the effort ex- 
pended be equalized? How many hours in a coal mine are 


equal to how many hours in the commissar's 
are proportioned to the effort needed to 
incomes will be unequal. If wages are 
product, the coal miner will get a larger 
than in a poor mine. If he is deprived of 
vantage, then wages cannot be equalized with 
If opportunity is equal, then achievements will be 
For ability is not equal. If ability is equalized, say by put- 
ting a good farmer on poor land and a poor farmer on good 
land, then opportunity is not equal. 

All this has been said many times, but it is none the less 
true. Total equality is impossible unless all human satisfac- 
tions as subjectively experienced could be reduced to a common 
measure: In an exact and total equality everything would 
have a price not merely goods, services, and work, but honor, 
power, preference, effort, and sacrifice. If such a calculus 
were conceivable, it would be conceivable that all rewards, 
all careers, could be so equalized that all men ought to feel 
that to desire more is to quarrel with perfect justice. 

But such a calculus applied to any actual economy would 
call for measures that are not even hinted at in communist lit- 
erature or in the Five- Year Plans. There would have to be an 
individual wage for each worker, separately calculated, and 
an individual price separately calculated for each customer 
for each article consumed. For only by an elaborate objec- 
tive economic inequality could the sense of subjective equality 
be satisfied. The wage would have to be what the man feels 
his labor is worth to others, and the price what the product 
of other men's labor is worth to him. This is, of course, an 
absurdity, but in reducing the argument to an absurdity the 
distance between the practical formulae of communism and its 
ideal pretensions is disclosed. 


5* The Working Theory of Communism 

In their working theory, as distinguished from their doc- 
trinaire aims, what the communists propose to do is to stop 
the payment of incomes to the owners of productive capital, 
to landlords, bondholders, and shareholders. The assump- 
tion is that if income is paid out in wages alone, then rent, in- 
terest, and profits will no longer produce social inequality, 
and* that this will end the class struggle, war, and the other 
social evils of an acquisitive society. But the truth is that the 
inequalities provoking ambition and antagonism will remain 
though wages are equal. For the difference between working 
in a mine and in a government office, between working on poor 
land and on good land, with good tools or poor ones, with 
labor-saving machinery or without it, will still persist. The 
fact that the landlords and capitalists had disappeared would 
not mean that no substantial advantages worth a struggle were 
left. If a ditch digger were paid as much as a commissar, it 
would still seem preferable to be a commissar. Unless the 
communist state can find a way to make each man's lot seem 
to him as good as any other man's, there will, if the communist 
interpretation of human nature is correct, be social advantages 
which men will strive to obtain and fight to hold. 

In the socialist society, as an exceptionally gifted observer ie 
has seen it in Russia, the organization of the economy "is in 
its mechanism almost identical with that of Capitalism" 
that is, with monopolistic corporate capitalism, "the main dif- 
ference being that 'ownership' is not transferable by private 
agreement since the Government appoints the 'owners' (man- 
agers). In such a system enterprises must naturally become 
separate units under the effective control of managers who 

i M, Polanyi. Cf. U. S. S. /?. Economics, p. 18. (Published by the 
Manchester University Press, 1956.) 


can make the best of local resources and local marketing. . . . 
The local Soviets approach the central Planning Cohimission 
with various projects which they consider to be profitable. 
From these projects the Commission chooses a certain num- 
ber which are thought to be sound and the local authorities 
are then provided with the money to start them and are held 
responsible for their success. The approved projects then ap- 
pear in the national plan of the year. Thus the Commission 
actually undertakes, towards the local authorities, merely the 
function of a financier to an entrepreneur. . . . The system 
can best be envisaged if we conceive of each private firm in a 
capitalist country being made into a limited company, the State 
holding the shares and appointing a manager to each enter- 

Now this system is in all fundamental respects like that which 
prevails in the United States when money is to be appropriated 
for public works. Under socialism all important enterprises 
are what we call public works. Is it necessary to remind 
ourselves of how acute is the rivalry for appropriations not 
only among communities but among those interested in vari- 
ous projects within each community? Does the fact that 
the residual title to public works is in the community, that 
none of them is operated for the profit of private shareholders, 
abolish the antagonisms of the groups interested in conflicting 
projects? It certainly does not. 17 Yet in a socialist regime 
not merely some interests but all the interests of every person 
are directly affected by the decisions which allocate capital. 
Imagine, for example, the issues presented to the government 
planners if they had to decide whether to allocate new capital 
for textile mills in the South or in New England. The ab- 

17 Consider, for example, the political bitterness engendered between 
Jacksonville and Miami, Florida, over the Florida Ship Canal; between New 
York and the Lake states over the St. Lawrence aeaway. 


sence of private shareholders would not make the decision 
easier; for the burden of the decision, supposing it were in 
favor of the South, would mean that the government had 
decided to uproot the New England workers, forcing them to 
move from their homes or find new occupations. 

It is incredible that anyone should have thought that by con- 
centrating the responsibility for these vital decisions in public 
officials the conflicts of human interest would disappear. Sub- 
stantiation for such an idea could be found in the Russian regime 
only because the conflicting interests are ruthlessly prevented 
from organizing for political action. It is the authority of the 
dictatorship, not the natural harmony of all interests, which 
creates the appearance of harmony. Were it not for the dic- 
tatorships, the rivalry of communities and of occupational inter- 
ests for priority in the allocation of capital would be like the 
adoption of an American pork-barrel bill. But it would be ever 
so much more fiercely competitive. For the competing inter- 
ests would be so much more numerous and would have so much 
more at stake. 

The socialist contention that the collective ownership of the 
means of production will produce a "classless" state inhabited 
by a race of men who are purged of acquisitiveness and aggres- 
sion is wishful thinking from a "crude fallacy. The transfer 
of the residual titles can at the utmost expropriate the incomes 
of certain private owners. In so far as those incomes are the 
necessary payments for necessary services, such payments will 
be made or the services will not be rendered. In so far as 
there are unnecessary payments of unearned increments, they 
can be expropriated under capitalism at least as effectively as 
under socialism, and for the welfare of capitalism they should 
be expropriated. On the other hand, there is no reason for 
thinking that the unearned increment will be more effectively 
expropriated under socialism than it can be under capitalism. 


For unearned increment in the form of economic rent would 
fell to the workers on superior lands and capital goods unless 
it .were deliberately recaptured by taxation. It would be no 
easier for a socialist state to take away from the farmer the 
unearned increment of his more fertile land than it. would be 
for a capitalist state to take it away from the landlord. In fact, 
it would be rather easier to tax the privilege of a few landlords 
and monopolists than of a multitude of peasants and workers. 
When I say that it would be easier, I am thinking, of course, of 
a self-governing democracy. Judging by the ruthless bru- 
tality with which the Soviets expropriated the kulaks, it must, 
of course, be admitted that a dictatorship might do it easily 
enough at least until it encountered the privileges of the 
inner minority upon which its own power depended, until, 
for example, it ventured to equalize the standard of life in 
the Red army and in the Commissariats with that of the peas- 

So the more closely one examines the socialist doctrine, the 
more plain it becomes that there is not in it any new principle 
which obliterates group conflicts or leads to a more successful 
adjustment of such conflicts. The real principle of social 
harmony in communism is nothing but the paramount power 
of the new ruling class. 

One kind of privilege in particular would, therefore, be 
ineradicable in a socialist state. That is the privilege of ruling 
it. In a planned economy some must make the plan and ad- 
minister it, the rest obey and be administered. It is impos- 
sible to imagine how from the exercise of such vast power there 
could be eliminated all the familiar characteristics of supreme 
privilege. Perhaps it might be done by stipulating that those 
who are to exercise this power shall be eunuchs chosen by lot, 
imprisoned like the queen bee, and then, when they have 
served a fixed term, put to death with Aztec ceremonial, and 


buried with honors! Some such arrangement might discourage 
the struggle for place and power. But if communist rulers 
arc to be less drastically dealt with, if they are to be trained 
for their special tasks and provided with the conveniences, the 
freedom, and the authority which the exercise of responsibility 
requires, they will live better and be more important than 
other men. 

To rule in the communist state must and will remain an 
object of ambition. To rule means to decide how the col- 
lective savings shall be invested, how and when the popula- 
tion shall work, and what each man shall receive. How is it 
possible to imagine that occupational and regional grievances 
and hopes will not unite with personal ambitions to create fac- 
tions and parties? Shall a new plant be built in the Ukraine 
or in the Urals? Shall an old plant be modernized or shall 
the money be used to increase the pay of the army? Shall 
there be more schools or more roads, more clothes or more 
steel, more food for the people or more imported machinery 
bought with the money the people need, for food? 

The mere fact that the state is the owner of the factories, 
its managers agents of the government rather than of the share- 
holders, would have little influence upon the desires of em- 
ployees to redress their grievances or to improve their lot. 
Some industries, and in each industry some workers, are stra- 
tegically more indispensable than others; is there reason to 
suppose, especially on the materialist hypothesis, that they will 
refraiA from exploiting their advantages? In determining how 
much capital to save out of current production, in allocating it 
for new investment, the communist government has to choose 
among industries, Regions, occupations. Though the planning 
were done with incorruptible wisdom, it would consist in a 
series of vital decisions favoring the present generation or 
the next, this kind of industry or that, this region or another. 


It would be astonishing indeed if those least favored in the 
pkn did not persuade themselves that, if they controlled the 
state, they could plan the economy with greater satisfaction 
to themselves and therefore with an even more incorruptible 

These questions of advantage arise out of the variety of life 
itself. They spring up in any society, capitalist or communist. 
But since a communist society is politically administered, and 
highly centralized in all vital matters, the social conflict is con- 
centrated in the field of politics. Because everything is de- 
cided politically, all conflict becomes political, and the possession 
of power becomes the key to all other possessions. 

In short,* communism, when it abolishes private property 
in productive capital, establishes a new kind of property in the 
public offices which manage the collective capital. The coni- 
missars replace the capitalists, exercising the same powers or 
greater ones, enjoying the same social privileges or greater 
ones, and though their money incomes may be less, their lux- 
uries less florid, they have everything that could tempt the Idss* 
favored to envy them, to challenge them, and to strive* fo r 
place them. The social situation and the psydioldgical 
anism which exist to-day, and which according to "- 
theory divide society into antagonistic classes, rerhs^igr^tac^ m 
the communist order. The only difference is that^MiMMtf 1 
under capitalism social advantages give political power, under 
communism political power gives social advantages. Thus the 
struggle for wealth is transmuted into a struggle for power, and 
the party of Stalin puts to death the partisans of Trotzkv. 

6. The Communist Reality 

This analytical examination of the contradictions in the com- 
munist theory suggests that we must look somewhere else than 



in the official doctrine for the working principles of the Russian 
planned economy. It is not possible to understand the prac- 
tical government of the Russian state by studying the Marxian 
dogmas. The dogmas accompany the action. But like the 
songs that soldiers sing when they go to war, the doctrines do 
not disclose the strategy of the high command. 

That there is some kind of radical cleavage between the 
Marxian theory and the historic Soviet state is most readily 
visible in the fact that before 1917 no orthodox Marxist could 
have imagined that Russia would be the first communist society. 
It had been laid down in the theory that communism must ap- 
pear first in the most highly industrialized countries. Although 
some attempts have been made to explain away this*discrepancy, 
there can be no doubt that Marx and all his followers up to the 
Russian Revolution thought that capitalism would develop 
gigantic monopolies and that socialism would come through 
their nationalization. The new order was supposed to be de- 
veloping as an embryo within the old order, and the dictatorship 
of the revolutionary proletariat was to be "the midwife," as 
Marx puts it, of "an old society pregnant with a new one." 
But when it came to the historic test, the oldest capitalist so- 
cieties, like England, Belgium, Germany, and the United States, 
were not pregnant and could not be delivered, whereas agrarian 
Russia, with its feeble and semi-colonial industries, gave birth 
to communism. 1 * 

This contradiction between the prophecy and the event is 
extremely significant. It not only shows that communism is 

18 Cf. Encyclopedia of the Social Sciences (Vol. XIII, p. 478), article 
on "Russian Revolution": "Unlike the Western countries, Russia did not 
experience the comparatively slow transition from a handicraft economy 
through the factory system to full-fledged industrialism. There was conse- 
quently little correlation between the base of the Russian economy, which 
iprited a rather primitive agriculture and peasant handicraft, and the 

iern industrial giants at the top, which had been built up with the aid 

of government subsidies and investments of foreign capital." 


not a necessary development out of capitalism, as all good com- 
munists used to believe, but it indicates that communism, as it 
has appeared in Russia, may be fundamentally unrelated to the 
evolution of capitalism, that it may have its roots in a wholly 
different set of circumstances. 

There is fairly good reason for thinking that on the eve of 
his conquest of the Russian state, Lenin held the orthodox 
Marxian view that the {lew order must already exist, preformed 
within the old one. Thus in his treatise on State and Revolu- 
tion, written between July and October, 1917, Lenin said that 
a the bookkeeping and control necessary for this have been 
simplified by capitalism to the utmost, till they have become the 
extraordinarily simple operations of watching, recording and 
issuing receipts, within the reach of anybody who can read and 
write and knows the first four arithmetical rules." ** Lenin's 
slogan before the seizure of power was: "Under a Soviet gov- 
ernment, state capitalism constitutes three-quarters of so- 
cialism" the idea being that the proletarian dictators would 
control the organization which capitalism had already created. 
He thought this could be done by nationalizing the banks on 
the theory that capitalist industry is itself controlled by the 
banks. He took this step in December 1917, hoping "that in 
this way the Soviet government might gain control of the entire 
capitalist economic system without destroying its internal or- 
ganization." * 

But within a year, by the summer of 1918, Lenin knew that 
this method of realizing communism had failed, that the 
Marxian theory of the old order, pregnant with the new, did 
not hold in Russia. The bolshevik explanation is that in 191 8 
civil war broke out in Russia and that the capitalistically- 
minded managers could not be trusted while the Soviets were 

u Of. /., p. 205. 

* Boris Brutzkus, Economic Planning in Soviet Russia, p. 100. 



at war with armies organized by the capitalist class. Professor 
Brutzkus, on the other hand, while conceding that this ex- 
planation has weight, maintains that it is not the whole ex- 
planation, that capitalist industry was paralyzed from the 
moment of the Revolution when the masses were incited to 
"rob the robber" and the bourgeoisie lost all security not only 
in their property but in their lives. Either explanation or 
both may be true: the essential point is that the fundamental 
prophecy of Marx did not come true. Communism did not 
come into the world as a development of the maturity of cap- 
italism in Russia; it did not develop from the capitalism exist- 
ing there but had deliberately to be fabricated on its ruins. 

This is, I believe, a crucial point in any effort to understand 
the inwardness of the communist regime. The circumstance 
which compelled Lenin to depart from the Marxian idea of 
controlling the economy organized by capitalists, and to adopt 
the idea of organizing a new economy, was the civil and inter- 
national war which broke out in July 1918 and lasted until 
November 1920. 

It was in the interval known officially as the period of "war 
communism" * that the fundamental principle of the planned 
economy was adopted because, as Lenin put it in January 1920, 
"the centralization of the national economic administration is 
the principal means at the disposal of the victorious proletariat 
for developing the productive forces of the country." The 
means was a centralized administration, the end was the sup- 
port of the Red army in a defensive war on many fronts and 
also in an offensive war against Poland. 

At the critical period of this war the Russian Soviet state 
was practically surrounded by enemies. There were German 
and Austrian troops in the Ukraine, a White army in the 

11 The civil war ended in Nov. 1920; the period of war communion 
ended in March 1921, 


Caucasus, a Czech army in Siberia and the Urals, an Allied 
army, Japanese and American, at Vladivostok, a British, French, 
and American army at Archangel, French naval forces in the 
Black Sea ports, and then, within this ring, the counter-revolu- 
tionary armies of Kornilov, Denikin, Yudenich, Wrangel, and 
Kolchak. Red Russia was cut off not only from the outer 
world but from the Russian regions which produced wheat, 
meat, coal, and oil. In this desperate struggle the communists 
had to create an army and supply it. 

These were the circumstances under which the primary insti- 
tutions of the planned society were established: the centralized 
administration, the dictatorship and the terror, the planning of 
production, the conscription of labor, and the rationing of con- 
sumption. These are the familiar features, not merely of com- 
munism, but of all modern national war economies. It is highly 
significant that Lenin was driven to a dictated collectivism be- 
cause he had to fight a war, that he had not intended to bring 
in communism in this way until he was forced to fight a war. 
What he created under the compulsion of events was not a 
Marxian state but a military state. No doubt the Marxist 
aspiration and ideology reenforced the morale of the people, 
as the Wilson ideology reenforced the Allied morale in 1917, 
as the fascist ideology reenforces German and Italian morale. 
But the directing purpose of the planning and of its execution 
was not the Marxian promise but grim military necessity. Any 
Russian regime compelled to fight such a war woudd have had 
to adopt essentially the same political and economic organiza- 

This brings us to the question of whether in its subsequent 
development Russian collectivism has continued to be pre- 
dominantly military in its aims and its methods. To prove that 
it has been, the argument must go deeper and must show that 
the purpose which has dominated the fundamental decisions of 


those who have planned the Russian economy is a military 
purpose, that the economy is organized not to improve the 
popular standard of life as rapidly as possible but to make Rus- 
sia a formidable military power. 

The proof is to be found in the fact that the two Five- Year 
Plans have had as their primary objective the creation of heavy 
industries in the strategically invulnerable part of Russia, and 
that to finance this industrial development the Russian people 
have been subjected to years of forced privation. If the 
primary purpose of these Plans was the improvement of the 
standard of life, can it be seriously argued that the erection of 
steel plants would have been put ahead of the manufacture of 
clothes, that food would have been exported while the people 
went hungry in order to buy machinery to make goods which 
could have been bought direct at cheaper prices? No doubt 
the idealists believe that in giving the people steel instead 
of bread they are creating for the future a self-sufficient indus- 
trial system on the socialist pattern. But why was it necessary 
to make Soviet Russia self-sufficient? Why was it neces- 
sary to aim at self -sufficiency even in the years when Ger- 
many and most of Central Europe were ruled by social demo- 
crats? Because, as the communists have repeatedly insisted, 
they have lived in dread of an "imperialist" war. In other 
words, they did not choose steel rather than bread in order to 
prove that communism could do anything that capitalism could 
do; they chose steel because they wished to be self-sufficient 
as against a military blockade. 

I do not mean to argue that they have not done many inci- 
dental things which are not military in origin. But I think 
it is evident that the fundamental decision as to the form of the 
political state, the plan of the economy, the determining policies 
of the regime, are what they are because Russia has been prepar- 
ing for War on her European and on her Asiatic frontiers. 


7. Collectivism a War Economy 

If this analysis is correct, then it has been demonstrated that 
the totalitarian states, whether of the fascist or the communist 
persuasion, are more than superficially alike as dictatorships, in 
the suppression of dissent, and in operating planned and di- 
rected economies. They are profoundly alike. For they have 
the identic controlling principle, which is the militarization of 
a people to the maximum degree. That the fascists and the 
communists hate each other and regard their respective doc- 
trines as antithetical does not impair the generalization that they 
are both organizing for war. Their hatred merely supports 
the generalization: it means that they have developed not only 
the weapons but the will to fight the war. 

We may go further and say that, though the planned economy 
is proposed as a form of social organization which will provide 
peace and plenty, thus far in all its concrete manifestations it 
has been associated with scarcity and wan. From 1 9 1 4 to 1918 
all the belligerents were driven step by step into a planned and 
politically directed economy. The bolsheviks, as we have seen, 
were driven into it by the civil and international war they were 
forced to fight. They have continued with it under the Five- 
Year Plans, which, in their strategy and in the order of their 
priorities, are fundamentally military. The fascists have 
adopted collectivism, more or less frankly proclaiming their 
intent to solve their social problems by developing their mili- 
tary power. In all the nations which are still democratic and 
capitalistic, plans are drawn for their rapid transformation into 
totalitarian states. The only difference is that these plans are 
not described as schemes of social reconstruction. They are 
called more candidly plans of rearmament and mobilization, 
and they are drawn up in War Colleges, Committees of Imperial 
Defense, in General Staffs and Naval Boards. 


That, I believe, is where all planned economies have origi- 
nated and must in the very nature of things originate. For it 
can be demonstrated, I am confident, that there is only one 
purpose to which a whole society can be directed by a deliberate 
plan. That purpose is war, and there is no other. 



1. The Dependence of Planning upon the Martial Sprit 

ALTHOUGH all the known examples of collectivism have had 
their origin in war or have as their objective the preparation 
for war, it is widely believed that a collectivist order could be 
organized for peace and for plenty. "It is nonsense," says 
Mr. George Soule, "to say that there is any physical impos- 
sibility of doing for peaee purposes the sort of thing we actually 
did for war purposes." * If the state can organize for war* it is 
asked, why can it not organize for peace and plenty? If it can 
mobilize against a foreign enemy, why not against poverty, 
squalor, and the hideous social evils that attend them? 

It is plain enough that a dictated collectivism is necessary if 
a nation is to exert its maximum military power: very evidently 
its capital and labor must not be wasted on the making of luxu- 
ries; it can tolerate no effective dissent, nor admit that men have 
any right to the pursuit of private happiness. " No one can dis- 
pute that. The waging of war must be authoritarian and col- 
lectivist. The question we must now consider is whether a 
system which is essential to the conduct of war can be adapted 
to the civilian ideal of peace and plenty. Can this form of 
organization, historically associated with military purposes and 
necessities, be used for the general improvement of men's con- 
dition? It is a critical question. For in answering it we shall 
be making up our minds whether the hopes invested in the 

1 Of. cit., "We Planned in War," p. 187, 


promises of the collectivists are valid, and therefore entitled to 
our allegiance. 

We must remind ourselves again, not only why collectivism 
is necessary in war but why war is so favorable to collectivism. 
In war time the political conditions fix the "imperatives" which 
Mr. Chase lays down: "the scrapping of outworn political 
boundaries and of constitutional checks and balances, where the 
issues are technical [sic]; centralization of government; the 
overhead planning and control of economic activity." 2 Under 
the system of centralized control without constitutional checks 
and balances, the war spirit identifies dissent with treason, the 
pursuit of private happiness with slackerism and sabotage, and, 
on the other side, obedience with discipline, conformity with 
patriotism. Thus at one stroke war extinguishes the difficulties 
of planning, cutting out from under the individual any moral 
ground as well as any lawful ground on which he might resist 
the execution of the official plan. The dissenter, the consci- 
entious objector, the indifferent and the discontented, have no 
rights which anyone is bound to respect, and if they are dealt 
with leniently it is because the war administrators have scruples 
or regard them as negligible. In the degree of their inter- 
ference with the prosecution of the war, they have no more 
standing against military authority than has been enjoyed by 
the victims of Lenin, Trotzky, Stalin, Mussolini, and Hitler. 
Mr. George Soule has found the polite name for all this. He 
puts first among "the lessons from our war planning" that "we 
must have an objective which can arouse general loyalty and 
enthusiasm." * 

1 Of. dt., p. 310. 

*Of. cit., p. 203. Mr. Soule, it should be understood, IB a pacifist. 
His admiration for the war spirit is not that of the sentimental militarist. 
Mr. Soule would like to have the unanimity and enthusiasm of the war 
spirit without the intolerance and brutality of the war spirit. He would 
like the omelet, but he would not like to break the eggs. 


War easily provides such an objective, and it is incomparably 
suited to the creation of a collective sentiment in which all lesser 
purposes are submerged. A call to arms is specific and every- 
one understands it. The cry that the enemy is at the gates, 
even the cry that beyond the deserts and mountains of Africa 
lies the promised land, needs little explaining. This is a very 
different thing from blowing the bugles and summoning the 
people to the abundant life to be achieved by "capacity opera* 
don of its plant, on the balanced load principle." 4 Anyone can 
imagine an enemy and hate him; but to talk about an abundant 
life is merely to begin an interminable argument. This is the 
reason, based on deep psychological compulsion, why the so- 
cialist propaganda has always relied more upon an appeal to 
class war than upon the vision of a socialist society, why the ef- 
fective leaders from Marx to Lenin have always derided as 
"unscientific" and "Utopian" any detailed concern with the 
nature of a socialist society. Their intuition has surely been 
sound. For it is the war spirit that most readily imposes 
unanimity for collective action among masses of men. When 
men are at peace, they have an incorrigible tendency, if one likes 
collectivism, a noble tendency if one dislikes it, to become indi- 

For reasons of this sort war provides a congenial climate for 
the administration of a planned economy. It is no less favor- 
able to the planners when they face the crucial problem of 
deciding what specifically they will plan for. "We must 
have," says Mr. Soule, "an objective which is capable of being 
so concretely defined that it can decide questions as to how much 
we need to produce and in what order of importance the re- 
quirements are to be arranged."* In war time, or when a 
nation is totally committed to preparation for war, Mr. Soule's 

4 Chase, of. cit., p. 308. 
* Of. cit., p. 203. 


planners go to the general staff for a schedule of war machines, 
ammunition, fuel and spare parts, uniforms, food and medical 
supplies, barracks, and the transportation needed in order to 
train, equip, and supply an army of a specified size. With the 
demands of the, general staff before them, they can take an 
inventory of their available supplies of men, materials, and 
technical skill. They can estimate the indispensable require- 
ments of the civilian population. From these more or less , 
known factors the planners can^ calculate the proportions and the 
priorities in the expenditure of men and materials and money. 
An overhead planning and control of economic activity is 
feasible because the plan is calculable. 6 It is calculable because 
there is a specific purpose to be achieved, the supply of a military 
force of known size with known requirements out of known 
resources, and to this concrete objective all other needs must 
conform. The planners know definitely what goods are needed 
and in what amount. There is no problem of how much can 
be sold. The problem is how much can be produced. There 
is no worry about the varying tastes of voluntary consumers j 
the consumer is rationed. There is no such thing as a choice of 
occupation; labor is conscripted. Thus, though war economies 

6 The original discoverer of the idea that a planned economy in peace is in- 
capable of "economic calculation" appears -to have been the Austrian econo- 
mist, Professor Ludwig von Mises "Die Wirtschaftsrechnung im Sozial- 
istischen Gemeinwesen," in Archiv f&r Sozialwissenschajt, Vol. 47, 1, April 
1920. Professor von Mises developed the idea in Part II of his Die Gem tin- 
mrtochaft (1922), published in English under the title Socialism. 

Others, notably the German sociologist Max Weber and the Russian econo- 
mist Boris Brutzkus, seem to have reached the same conclusions independently 
and concurrently. Since 1920 a formidable literature has developed in 
Europe. In English, besides von Mises's Socialism, the most important 
available worb are the book on CottectMst Economic Planning, edited by 
F. A. von Hayek, containing papers by N. G. Pierson, Ludwig von Mises, 
Georg Halm, and Enrico Barone, also a bibliography; and Boris Brntzkus's 
Economic Planning in Soviet Russia. 

An acquaintance with this school of socialist criticism is indispensable to all 
who would now discuss the problem of collectivism. 


are notoriously inefficient, they can be administered by the 
method of overhead planning and control because, theoretically 
at leasty there are no unknown factors, and there can be no re- 
sistance; it is possible, therefore, to calculate the relation of the 
means to the end and execute the plan whether people like it 
or not. 

It is from military planning of this sort that all directed 
economies have derived their basic principles. One has only 
to examine their subsidies to agriculture, their policies in respect 
to the import of raw materials, the strategic design of their 
capital investment, as, for example, the Magnitogorsk-Kuz- 
netsk Combine in Russia, the Italian "battle of wheat," or 
Dr. Schacht's management of German foreign trade, to see 
that military considerations supply the directives of the plan- 
ning. But like their predecessors in war time, these politically 
managed economies are not planned initially by Dr. Schacht's 
office or its Italian equivalent or by the Russian Gosplan. These 
civilian planning bodies receive their orders both for their ob- 
jectives and for the specifications for attaining them from a 
higher authority the general staff of the army. 

Without such specific directives it would be impossible to 
plan. Yet in the popular discussion of planning this crucial 
point is rarely appreciated, and it is naively assumed that the 
planning boards determine the character of the plan. They 
can no more do that than an architect can plan a building until 
someone tells him whether it is to be a church, a factory, a tene- 
ment, a garage, or a gambling casino. Even when he knows 
that, he has to be told whether the church is to be a cathedral 
or a mosque, whether the garage is to hold one Ford or a fleet 
of omnibuses. If he knows what is wanted he can plan a 
building. But no planning can tell him what is wanted. That 
decision must come from someone higher up than the planner: 
in a society it must come from the sovereign. 


The question of whether an economy can be planned for 
abundance, for the general welfare, for the improvement of the 
popular standard of life, comes down, therefore, to the question 
of whether concepts of this sort can be translated into orders 
for particular goods which are,as definite as the "requisitions 1 ' 
of a general staff. An objective like "the general welfare" 
has to be defined as specific quantities of specific goods so 
many vegetables, so much meat, this number of shoes, neck- 
ties, collar buttons, aspirin tablets, frame houses, brick houses, 
steel buildings. Unless this can be done there will not exist 
the primary schedule of requirements from which to calculate 
the plan. The general staff can tell the planner exactly how 
much food, clothing, ammunition, it needs for each soldier. 
But in time of peace who will tell the planners for abundance 
what they must provide? 

2. Civilian Planning 

The answer given by Mr. Lewis Mumf ord T is that "a normal 
standard of consumption" can be defined by biologists, moral- 
ists, and men of cultured taste, that the goods necessary to sup- 
port it can be Standardized, weighed, measured," that they 
should be supplied to all members of the community. He calls 
this "basic communism." It is not quite clear to me whether 
he believes that the goods listed in this normal standard are 
to be furnished as they are to soldiers out of a public commis- 
sariat or whether he proposes to guarantee everyone a basic 
money income sufficient to buy a "normal" quantity of goods. 
If he has in mind the providing of rations of standard goods, 
then, of course, he has considerable confidence in his ability to 
determine what is good for the people, small respect for their 
varied tastes, and an implied willingness to make them like what 

'Of. <#.,Ch.VIII. 


they ought to like. ^ Conceivably it could be done. But I 
should suppose it could be done only under the compulsion of 
necessity: that is, if goods were so scarce that the choice lay be- 
tween the official ration and nothing. On the other hand, if 
he has in mind a guaranteed minimum income which may be 
spent freely, then he has no way of knowing whether the con- 
sumers will have Mr. Mumf ord's own excellent tastes, and go 
to the stores demanding what he thinks they should demand. 
But if they do not wish to buy what he would like them to buy, 
then his planners are bound to find that there is a scarcity of 
some goods and a glut of others. 

The difficulty of planning production to satisfy many choices 
is the rock on which the whole conception founders. We have 
seen that in military planning this difficulty does not exist. It 
is the insurmountable difficulty of civilian planning, and al- 
though advocates like Mr. Mumford, Mr. Chase, and Mr. 
Soule have never, I think, faced it squarely, they are not un- 
aware that it exists. They show that they are troubled because 
they denounce so vehemently the tastes of the people and the 
advertising which helps to form those tastes. They insist that 
the people have foolish and vulgar desires, which may be true 
enough, and that altogether better standards, simpler, more 
vital, more aesthetic, and more hygienic, ought to replace them. 
I agree. But I do not see how the purification of the public 
taste is to be worked out by a government commission. I can 
see how and why the general staff can decide how soldiers 
should live under martial discipline; but I cannot see how any 
group of officials can decide how a civilian population shall 
live nobly and abundantly. 

For the fundamental characteristic of a rising standard of 
life is that an increasing portion of each man's income is spent 
on unessentials j it is applied, in other words, to things in which 
preference rather than necessity is the criterion. If all income 


had to be spent on the absolute necessities of life, the goods re* 
quired would be few in number and their production could 
readily be standardized into a routine. Now it should be 
noted that all known examples of planned economy have 
flourished under conditions of scarcity. In the war economies 
of 1914-1918, in the collectivist regimes in Russia, Italy, and 
Germany, the supply of necessary goods has never been equal 
to the demand. Under such conditions, as during a siege or 
a famine, the communist principle is not only feasible but neces- 
sary. But as productivity arises above the level of necessity 
the variety of choices is multiplied. And as the choices are 
multiplied, the possibility of an overhead calculation of the re- 
lation between demand and supply diminishes. 

We may approximate an idea of the order of magnitudes in 
this field by remembering that during the year 1 929 the Amer- 
ican people spent approximately ninety billion dollars.* I 
have sought in vain to find even a loose estimate of how many 
different kinds of goods and services they bought. But one 
can obtain some sense of their infinite variety by thinking of the 
goods offered for sale in a big department store, by glancing at 
the names of the corporations listed on the stock exchanges, 
by thumbing through a city directory and a telephone book, by 
looking at mail-order catalogues, the help-wanted columns, 
and the advertisements in the newspapers. The variety of 
goods and services offered in the markets of America defies de- 
scription. Now, of the ninety billions spent, some twenty 
billions went into the purchase of food. This meant a highly 
varied diet. But even assuming that food is the most nearly 
calculable of human necessities, the one that can, by simplifying 
the public bill of fare, be rationed successfully among large 
bodies of men, there would have remained in 1929 variable 
expenditures of about seventy billions. 

* William H. Lough, High-Level Consumftion, App. A. 


By what formula could a planning authority determine which 
goods to provide against the purchases of thirty million fam- 
ilies with seventy billions of free spendable income? The calcu- 
lation is not even theoretically possible. For, unless the people 
are to be deprived of the right to dispose of their incomes volun- 
tarily, anyone who sets out to plan American production must 
first forecast how many units of each commodity the people 
would buy, not only at varying prices for that commodity, but 
in all possible combinations of prices for all commodities. 

Within limits, some narrow and others almost indefinitely 
elastic, more articles of one sort will be bought at a low price 
than at a high price. Let us suppose, then, that the planning 
authority wishes to make a five-year plan for the production of 
automobiles, and that by means of the familiar mathematical 
curves used by economists it determines that at $500 a car the 
people will buy ten million new cars in five years. The plan- 
ners could then calculate the amount of steel, wood, glass, 
leather, rubber, gasoline, oil, pipe lines, pumps, filling stations, 
needed to manufacture and service that many additional auto- 
mobiles. This would be theoretically feasible. The problem 
would not differ essentially from planning to supply an army; 
the industrial system would be planned to produce ten million 
automobiles. There would be a single, specific, quantitative 
objective as the premise of the plan. But such a planned econ- 
omy would please only monomaniacs. 

So let us suppose that the authority has also to plan the con- 

9 Soe Recent Social Trends, Report of President Hoover's Research Commit- 
tee: "With all the much-discussed pressure for standardization in American 
life, there is probably to-day a greater variation from house to house in the actual 
inventory list of family possessions and of activities by family members than at 
any previous era in man's history. The consumer's problem i s one of selection 
to a degree never before known. Industry in turn faces the necessity of com- 
peting not merely against rival makes of the same commodity but, to an 
unprecedented extent, against the entire field of alternate goods and serv- 
ices. . . . (Vol. II, p. 858.) 



struction of houses. The task immediately becomes more 
complicated For now it is no longer possible to stop at de- 
termining how many houses the people will buy at, let us say, 
$3000 apiece. It is necessary also to decide how they will 
choose, and in what proportions, between a new car at $500 and 
a new house at $3000. With cheap houses available, some will 
prefer them to cars; others will prefer cheap cars to houses. 
The planners would have to predict the choice. They would 
then find, of course, that since houses also require steel, wood, 
glass, they would have to recalculate the plan drawn up when 
they had only automobiles in mind* 

But that would not be the end of their difficulties. For there 
would be a party saying that housing is more important, or, as 
Mr. Mumford would put it, more vital, than joy-riding, that 
therefore cars should cost 20 per cent more, or $600, and houses 
20 per cent less, or $2400. The planners would have to consult 
an oracle; they could have no objective criterion by which to 
determine whether freedom of movement or stability of resi- 
dence was more conducive to an abundant life. But suppose 
they listened to Mr. Mumford and agreed to raise the price of 
cars and reduce the, price of houses. Everything would have 
to be recalculated and replanned. For now there would have 
to be less rubber imported, but there would have to be more 
cement produced domestically; there would have to be less 
filling-station equipment and more bathroom fixtures. 

In line with the decision to favor a settled as against a nomadic 
way of life, many other activities would have to be replanned. 
There would probably be more demand for radios and carpet 
slippers, less demand for movies and roadside eating places. 
The state would either have to provide more subways and 
busses to take the man of the family to work, the woman to the 
market, and the child to school, or it would have to move fac- 
tories, shopping centres, and schools nearer to the home. The 


authority would have to calculate these shifting demands cor- 
rectly in order to do away with the chaos and waste of competi- 
tive individualism. It would require some mighty arithmetic. 
As a matter of fact a regiment of Einsteins could not make the 
calculation because the problem is inherently incalculable* For 
even if we make the fantastic hypothesis that the planning au- 
thority could draw up reliable estimates of what the demand 
would be in all combinations of prices, for all the thousands of 
articles that Americans buy, there is still no way of deciding 
which schedule would fit the people's conception of the most 
abundant life. 

Out of all the possible plans of production some schedule 
would have to be selected arbitrarily. There is absolutely no 
objective and universal criterion by which to decide between 
better houses and more automobiles, between pork and beef, 
between the radio and the movies. In military planning the, 
criterion exists: to mobilize the most powerful army that the 
national resources will support. That criterion can be defined 
by the general staff as so many men with such and such equip- 
ment, and the economy can be planned accordingly. But 
civilian planning for a more abundant life has no definable 
criterion. It can have none. The necessary calculations can- 
not, therefore, be made, and the concept of a civilian planned 
economy is not merely administratively impracticable; it is not 
even theoretically conceivable. The conception is totally de- 
void of meaning, and there is, speaking literally, nothing in it 

3. Conscription and Rationing in Order to Plan 

The primary factor which makes civilian planning incalculable 
is the freedom of the people to spend their income. Planning 
is theoretically possible only if consumption is rationed. For 
a plan of production is a plan of consumption. If the authority 


is to decide what shall be produced, it has already decided what 
shall be consumed. In military planning that is precisely what 
takes place: the authorities decide what the army shall consume 
and what of the national product shall be left for the civilians. 
No economy can, th'eref ore, be planned for civilians unless there 
is such scarcity that the necessities of existence can be rationed. 
As productivity rises above the subsistence level, free spending 
becomes possible. A planned production to meet a free de- 
mand is a contradiction in terms and as meaningless as a square 

It follows, too, that a plan of production is incompatible with 
voluntary labor, with freedom to choose an occupation. A plan 
of production is not only a plan of consumption, but a plan of 
how long, at what, and where the people shall work. By no 
possible manipulation of wage rates could the planners attract 
to the various jobs precisely the right number of workers. 
Under voluntary labor, particularly with consumption rationed 
and standardized, the unpleasant jobs would be avoided and the 
good jobs overcrowded. Therefore the inevitable and neces- 
sary complement of the rationing of consumption is the con- 
scription of labor, either by overt act of law or by driving 
workers into the undesirable jobs by offering them starvation 
as the alternative. This is, of course, exactly what happens in 
a thoroughly militarized state. 

The conscription of labor and the rationing of consumption 
are not to be regarded as transitional or as accidental devices 
in a planned economy. They are the very substance of it. To 
make a five-year plan of what a whole nation shall produce is 
to determine how it shall labor and what it shall receive. It 
can receive only what the plan provides. It can obtain what 
the plan provides only by doing the work which tht plan calls 
for. It must do that work or the plan is a failure} it must 


accept what the plan yields in the way of goods or it must do 

All this is perf ectiy understood in an army or in war time 
when a whole nation is in arms. The civilian planner cannot 
avoid the rationing and the Conscription, for they are the very 
essence of his proposal. There is no escape. If the people 
are free to reject the rations, the plan is frustrated} if they are 
free to work less or at different occupations than those pre- 
scribed, the plan cannot be executed. Therefore their labor 
and their standards of living have to be dictated by the planning 
board or by some sovereign power superior to the board. In 
a militarized society that sovereign power is the general staff. 

4. Planning versus Democracy 

But who, in a civilian society, is to decide what is to be the 
specific content of the abundant life? It cannot be the people 
deciding by referendum or through a majority of their elected 
representatives. For if the sovereign power to pick the plan 
is in the people, the power to amend it is there also at all times. 
Now a plan subject to change from month to month or even 
from year to year is not a planj if the decision has been 'taken 
to make ten million cars at $500 and one million suburban 
houses at $3000, the people cannot change their minds a year 
later, scrap the machinery to make the cars, abandon the houses 
when they are partly built, and decide to produce instead sky- 
scraper apartment houses and underground railroads. 

There is, in short, no way by which the objectives of a planned 
economy can be made to depend upon popular decision. They 
must be imposed by an oligarchy of some sort, 10 and that 

10 Which may, of course, let the people ratify the plan once and irrev- 
ocably by plebiscite, as in the 'German and Italian plebiscites. 


oligarchy must, if the plan is to be carried through, be irre- 
sponsible in matters of policy. Individual oligarchs might, 
of course, be held accountable for breaches of the law just as 
generals can be court-martialed. But their policy can no more 
be made a matter of continuous accountability to the voters 
than the strategic arrangements of the generals can be de- 
termined by the rank and file. The planning board or their 
superiors have to determine what the life and labor of the people 
shall be. 

Not only is it impossible for the people to control the plan, 
but, what is more, the planners must control the people. 
They must be despots who tolerate no effective challenge to 
their authority. Therefore civilian planning is compelled to 
presuppose that somehow the despots who climb to power will 
be benevolent that is to say, will know and desire the supreme 
good of their subjects. This is the implicit premise of all the 
books which recommend the establishment of a planned economy 
in a civilian society. They paint an entrancing vision of what 
a benevolent despotism could do. They ask never very 
clearly, to be sure that somehow the people should sur- 
render the planning of their existence to "engineers," "ex- 
perts," and "technologists," to leaders, saviors, heroes. This 
is the political premise of the whole collectivist philosophy: that 
the dictators will be patriotic or class-conscious, whichever term 
seems the more eulogistic to the orator. It is the premise, too, 
of the whole philosophy of regulation by the state, currently 
regarded as progressivism. Though it is disguised by the il- 
lusion that a bureaucracy accountable to a majority of voters, 
and susceptible to the pressure of organized minorities, is not 
exercising compulsion, it is evident that the more varied and 
comprehensive the regulation becomes, the more the state be- 
comes a despotic power as against the individual. For the frag- 
ment of control over the government which he exercises through 


his vote is in no effective sense proportionate to the authority 
exercised over him by the government. 

Benevolent despots might indeed be found. On the other 
hand they might not be. They may appear at one time j they 
may not appear at another. The people, unless they choose 
to face the machine guns on the barricades, can take no steps to 
see to it that benevolent despots are selected and the malevolent 
cashiered. They cannot select their despots. The despots 
must select themselves, and, no matter whether they are good 
or bad, they will continue in office as long as they can suppress 
rebellion and escape assassination. 

Thus, by a kind of tragic irony, the search for security and 
a rational society, if it seeks salvation through political author- 
ity, ends in the most irrational form of government imaginable 
in the dictatorship of casual oligarchs, who have no hered- 
itary title, no constitutional origin or responsibility, who cannot 
be replaced except by violence. The reformers who are staking 
their hopes on good despots, because they are so eager to plan 
the future, leave unplanned that on which all their hopes 
depend. Because a planned society must be one in which the 
people obey their rulers, there can be no plan to find the plan- 
ners: the selection of the despots who are to make society so 
rational and so secure has to be left to the insecurity of ir- 
rational chance. 



1. The Theory of Democratic Collectivism 

IN countries like Great Britain or the United States there is no 
manifest disposition to establish a totalitarian order with a regi- 
mented population under a militarized autocracy, but for some 
sixty years these democracies have tended increasingly to seek 
relief from poverty and disorder by the use of collectivist 
measures. 1 In fact it may be said that contemporary progres- 
sives are gradual collectivists and that they hope by the grad- 
ualness of their methods to avoid the violence of dictatorship. 
Those who hold this view are at present the overwhelming 
majority of public-spirited and well-disposed persons in the 
democratic countries. They are not fanatics who, in order to 
achieve a planned society, would be willing to sweef> away the 
guaranties of liberty and the responsibility of rulers to the 
people. Their goal is the public administration of the economy, 
but they believe that no step must be taken to that goal without 
popular consent obtained by persuasion in open debate. They 
hold that in this way the advance into collectivism can be made 
without class struggle, dictatorship, or the militarization of 

*A. V. Dicey (of. cit., p. 217) says that "English legislative opinion 
has from about 1870 onwards given a doubtful, if not a negative reply" to 
the question whether "the evils which bring ruin on a commonwealth" can 
be cured by "the systematic extension of individual freedom and the re- 
moval of every kind of oppression?' 


For approximately three generations a gradual democratic 
advance into collectivism has been under way. This move- 
ment also has its ideology. But here again, as with the fascists 
and the communists, the theory is very different from the prac- 
tice and the results are very different from the promises. 

The theory of gradual collectivism rests upon the assumption 
that majorities express the will and represent the interests of 
society, and that they have inherited from the king the preroga- 
tives of his sovereignty. 2 The gradual collectivist believes in 
the absolutism of the majority, having by a fiction identified 
the mandates of transient majorities with the enduring and 
diverse purposes of the members of a community. He thinks 
it absurd that a few oligarchs in the Kremlin or demagogic 
dictators in Berlin or Rome should pretend that their personal 
decisions are the comprehensive purposes of great nations. Yet 
the gradual collectivist, under the banner of popular sover- 
eignty, believes in the dictatorship of random aggregations of 
voters. In this theory the individual has no rights as against 
the majority, for constitutional checks and bills of rights exist 
only by consent of the majority. Even the right of the 
majority to rule is at the mercy of any passing majority. For 
there is nothing in the doctrine of the sovereignty of the ma- 
jority to preclude the abolition of majority rule by vote of a 
majority. In fact it was under the segis of this doctrine that 
Napoleon III and Hitler came to power. 

Thus by one fiction the gradual collectivist identifies passing 
majorities with the nation. By another fiction he treats the 
legislators as representative of the majorities which elected 
them. And finally, by a third fiction he pretends that the 
executive and administrative machine represents the will .of 
a majority of the legislators. The nation is supposed to have 
delegated its unlimited authority to a majority of the en- 



franchisee! voters* They are supposed to have delegated their 
unlimited authority to a majority in the legislative assembly. 
The assembly is supposed to have delegated its unlimited au- 
thority to the executive and the bureaucracy. To this central 
authority the gradual collectivist then proposes to entrust in- 
creasingly the administration of the social system. 

It is evident that a regime of this sort is afflicted with an 
insoluble contradiction. In so far as it seeks to administer the 
economy under a rational and coherent plan, it must somehow 
prevent one majority from overriding the decisions of a previous 
majority. For if a plan is to be carried out, it must be adopted 
and the people must thereafter conform. If they do not con- 
form, if they are free at any time to agitate for amendments, 
the plan ceases to be a plan. It would not be a plan if its parts 
were not closely interrelated} if it is subject to continual change 
at vital points, the whole design has to be remade continually. 
Suppose, for example, that the Russian people had had a demo- 
cratic control over the Five- Year Plan, and that, having as- 
sented at the outset to the proposal that they manufacture steel 
before they manufactured clothing, they had changed their 
minds. They would not have amended the plan: they would 
have abolished it. It would have been necessary to draft a 
wholly different plan, and two years after the new plan had 
been put into effect the people might again have changed their 
minds. This would have called for still a different plan. But 
a series of different plans would be no plan at all. 

The very essence of the democratic process is that the rulers 
are continually responsible to popular opinion, and unless that 
opinion is free to change, and in changing to alter the policy of 
the state, there is no democracy. The very essence of the con- 
ception of planning is that a design can be adopted to which the 
people will thereafter conform. That is equivalent to saying 
that a democratic people cannot have a planned economy, and 


that in so far as they desire a planned economy they must sus- 
pend responsible government 

Yet men of unimpeachable loyalty to democratic ideals are 
currently expounding the idea that the plan of an ordered 
society can be drawn up, that the people can be converted to it 
by agitation and propaganda, and that after the people have 
ratified it, the plan can be executed. Here, for example, is 
Professor Beard's idea of how, with "the approval, consent, 
acquiescence, knowledge and cooperation" 8 of the people, a 
planned, and administered society can be established in the 
United States. He would create "a single national authority 
with two divisions: (1) a division charged with the responsi- 
bility of fixing a national standard-of-life budget with quanti- 
ties, qualities, and specifications expressed in the most exact 
and scientific terms; (2) a division of production specialists em- 
powered to show in how far, and by what methods, the resources 
and industrial arts of the United States can supply the requisite 
goods and materials." This national authority would produce 
a report, "with maps, pictures and other forms of graphic pres- 
entation," which would be "the most stupendous and superb 
presentation of accomplishments, possibilities and projects ever 
made in the whole history of civilization." Representatives 
of interests opposed to the plan would be invited to state their 
objections. "Thus would be disclosed the chief interests and 
methods standing in the path of realization" and "in this open 
way would be made clearer the measures and practical steps 
necessary to proceed with the program." The President would 
then present the report to the nation by messages, addresses, 
and radio. There would be an intensive campaign of propa- 
ganda. After that the report "would be made the prime 
document of policy to which all partial measures would be re- 
ferred for consideration and testing." This "program for 

Chtrlet A. Beard, Th* Of** Door at Home, pp. 311-13. 


America would give direction to public education, now so 

Thus by unremitting government propaganda a way of life 
worked out by a government bureau would be inculcated upon 
the people. Once converted, they would presumably grant 
to the government all power necessary to carry out the plan. 
The report, says Mr. Beard, "would be made the prime docu- 
ment of policy." It is not dear who is to establish the primacy 
of the document. It is not clear what is to happen if the people 
change their minds about the national standard-of-life budget 
as drawn up by the national authority. It is not clear whether 
they would have the right to give up the plan or are supposed 
to surrender their right to change it. This is the insoluble 
contradiction of the gradual collectivism For unless we are 
to suppose that the initial ballyhoo is to settle the issue, either 
the national authority will be in a perpetual state of confusion, 
like a man who might lay down the keel for a boat and is then 
told he must make it into a wagon, or the people, having once 
accepted the report, will have to be drilled unceasingly by a 
stupendous propaganda to keep them from changing their 
minds, and^ the government having become deeply committed 
to the report, vested interests having been created, the dis- 
senter would have to be treated as antisocial and unpatriotic. 

2. The Polity of Pressure Groups 

In the real world the historic advance of democratic col- 
lectivism has not been directed by any such rationalized vision 
of a new society. It is true that visions of this sort have in- 
fluenced the argument over specific measures, rousing many 
to action and breaking down resistance, and it would be difficult 
to exaggerate the practical influence oh western society of these 
collectivists who call themselves social democrats, Fabian 


socialists, evolutionary or revisionist socialists, or merely pro- 
gressives. The collectivists have conquered the intellectual 
world, to borrow a phrase from Mr. Keynes,* as thoroughly as 
the Holy Inquisition conquered Spain. They have made it 
seem rather ridiculous and contemptible to hold that mankind 
can advance by proceeding with the process of liberation; they 
have persuaded the intellectual world that social improvement 
must come by magnifying the dominion by public officials* But 
though collectivists exercise a kind of intellectual monopoly 
and absolute authority over the assumptions of modern politics, 
they have not imbued the mass of the people with their own 
general conception of society as a whole. The doctrines re- 
main the possession of an elite. Electorates and parliaments, 
though they Have been moving rapidly in the collectivist direc- 
tion, have not consciously been shaping society according to a 
new design. 

Though the movement has been under way for more than 
sixty years, it is a matter of common knowledge that even in 
countries where the socialist vote has been considerable it is no 
measure of the number of genuinely convinced and indoctrinated 
socialists. There are many more socialist voters than there 
are convinced socialists. Thus it is fair to say that the advance 
of collectivism has not been determined by the image of a col- 
lectivist society. The advance has consisted of a series of defi- 
nite measures, all more or less within the same general category, 
to be sure. But these measures have come not from a general 
theory but from a series of efforts to deal with specific grievances 
and to provide particular benefits. 

Such has been the inner principle of the gradual and demo- 
cratic collectivist movement. It is, I believe, its only possible 
principle. Because a democracy cannot adopt a plan for col- 

*Op> cit. y p. 32. Mr. Keynes is speaking of Ricardo's influence on the 
clinical economists of the nineteenth century. 


lectivism, the practical initiative in each measure of its gradual 
advance comes not from the energy of a general ideal but from 
organized interests seeking protection and privileges. In prac- 
tice gradual collectivism is not an ordered scheme of social 
reconstruction. It is the polity of pressure groups. 

The movement advances by measures adopted from time 
to time at the instigation of aggrieved or aspiring groups of 
voters. Through their leaders and lobbyists they persuade, 
cajole, coerce, and occasionally corrupt the electorate or the 
parliament} often they conspire with other organized interests 
to form majorities by coalition. Though exceptions could be 
cited, it is substantially true that, while the moral and in- 
tellectual justification for each measure is derived from the 
general ideology of collectivism, the initiative comes from or- 
ganized interests. There has been some legislation for the 
welfare of the weak and the dependent which may be said to 
be the work of humane and disinterested men. But these 
measures do not deeply affect the conduct of business and gov- 
ernment. Though they are humanly important, they are 
peripheral and superficial, and by all thoroughgoing col- 
lectivists are recognized as such. 

The measures which have profoundly affected the social order 
because they have meant the shift of important social benefits 
from one group to another, from one region or occupation to 
another, from individuals to great corporations or from indi- 
viduals to the government all such decisive measures have 
proceeded from the pressure of interested groups upon the elec- 
torate and upon the politicians. The particular measures would 
not have been adopted when they were adopted but for the 
organized agitation, the lobbying, and the exercise of influence 
by these interested groups. Thus no serious historian of poli- 
tics would imagine that he had accounted for the protective 
tariff or the system of bounties or subsidies, for the monetary 


and the banking laws, for the state of the law in regard to 
corporate privileges and immunities, for the actual status of 
property rights, for agricultural or for labor policies, until he 
had gone behind the general claims and the abstract justifica- 
tions and had identified the specifically interested groups which 
promoted the specific law. 

Such an understanding of the actual history should not be 
confused with the arbitrary classification of society into a cap* 
italist class and a proletarian class. For while it may serve the 
purposes of a revolutionary propaganda to say with Man that 
the modern state is "nothing more than a committee for the ad* 
ministration of the consolidated affairs of the bourgeois class 
as a whole," the specific measures taken by modern states are 
unintelligible on the hypothesis that there is a "bourgeois class" 
which has "consolidated affairs." Consider, for example, the 
American tariff as it existed when President Hoover signed the 
Hawley-Smoot Bill in 1930. It would be admitted by all, I 
suppose, that with negligible exceptions each item in each sched- 
ule originated with at least some of the producers of the article 
protected by the duty, and that the rate was either a grant of 
their dqnands or a compromise between their demands and the 
objections raised by representatives of some other interest. No * 
one would pretend that this tariff which profoundly affected 
the whole American economy, not to speak of the economy of 
the world, was in any sense of the term conceived by "the 
bourgeois class" as a whole. The very essence of that tariff, 
and of all its predecessors, was that, far from representing the 
"consolidated" interests of businessmen as a class, it repre- 
sented the special interests of some of them. 

What "protection," for example, do tariffs on steel, or for 
that matter on anything else, give to such industries as the rail- 
roads, the light, power, telephone, and telegraph companies, 
the building trades, automobile manufacturers, newspapers, 


hotels, bakeries, milk producers and distributors, streetcars, 
busses, ferries, lake and river steamboats, the freight business, 
of the service industries, such as garages and filling stations? * 
The anatomy of the tariff bill itself contains conclusive proof 
that certain producer interests, not American producers as a 
whole, are responsible for the fact that commerce is being regu- 
lated in the particular way that the law regulates it The 
Marxian assumption that Congress legislated for "the consoli- 
dated affairs" of "the bourgeois class" is as misleading as the 
assumption of the defenders of the tariff that it legislated for 
the American people as a whole. 

Under gradual collectivism, precisely because it is gradual, 
the measures of state interference are almost invariably pro- 
moted by particular groups. Invariably they claim that their 
particular interest is identical with the national interest. But 
it is the particular interest which moves them to raise the issue. 
The legislature may reject the claim if someone is able to expose 
its fallacy. But in so far as the legislature acts, it must listen to 
some petition. It does not move unless it has been provoked 
by the claim of some group. For it has no other criterion by 
means of which it can decide where and when and to what end 
it should intervene. Suppose, for example, that there were 
no tariff and that no lobbyist could communicate with any mem- 
ber of Congress, and then that Congress, believing in the ab- 
stract principle of national protection, were able to hear only 
from absolutely disinterested economists let us say from a 
group of men who had acquired complete knowledge of all the 
available data after a lifetime of study in a Tibetan monastery. 
Would the law resemble any existing tariff? Could any law 

6 These items are selected from a larger list compiled by Dr. Benjamin 
M. Anderson. Cf. his address before the Indianapolis Chamber of Com- 
merce, Jan. 30, 1936, published by the Chase National Bank of New 


be written by men who were equally interested in helping the 
automobile industry to obtain cheap steel and the steel industry 
to maintain a fixed and protected price? In helping the house 
builder or the manufacturer to obtain inexpensive materials 
and the producers of those materials to obtain a protected 

The protective tariff does not stand alone. The same princi- 
ple is no less evident in the collectivist measures designed to as- 
sist farmers or workers. The very fact that they are generally 
proposed on the ground that something must be done to equalize 
burdens, privileges, and bargaining power is in itself a most 
significant indication of the real nature of the process. If we 
examine such measures in detail we shall rarely fail to observe 
that in fact they are promoted not by "the farmers*' or by "labor 11 
as a whole but by particular interests among farmers and work- 

The Agricultural Adjustment Act, for example, in its dealings 
with cotton, paid little attention to the tenant farmers, the share- 
croppers, not to speak of the agricultural laborers who were dis- 
placed by the curtailment of cotton production. Moreover, the 
curtailment of cotton production by the method of acreage reduc- 
tion paid scant attention to the claims of the efficient producer as 
against those of the less efficient. Moreover, initially the act 
itself selected seven "basic" commodities which were entitled 
to benefit payments 5 by subsequent amendment in response to 
the pressure of organized interests the number was increased to 
sixteen. All the other fanners had to contribute to these bene- 
fits by paying the processing taxes. Thus a dairyman paid a 
tax on cotton, wheat, hogs, and corn. But he received no 
benefit payments. I do not mean to argue that in the critical 
conditions which prevailed in the year 1933 special legisla- 
tion of this sort may not have been temporarily in the general 
interest. My concern is merely to illustrate the underlying 



principle of gradual collectivism, which is that its specific 
measures owe their origin to particular interests and that its 
design follows the pattern of the influences exerted by pres- 
sure groups. 

The same principle tends to control labor legislation. Any- 
one who will analyze the laws passed to benefit labor will find 
that, apart from some few of a humanitarian character, they 
reflect fairly well the strategic advantages of certain groups of 
workers. Thus railroad employees are more highly protected 
by special laws than any other group, and among railroad em- 
ployees the members of the brotherhoods are more carefully 
protected than the shopmen or the unskilled workers who 
maintain the tracks. The social-security laws providing for 
insurance against unemployment, for example, and the laws to 
promote collective bargaining give protection to well-estab- 
lished, strategically placed, and highly organized groups. 
They are quite unable to give the same degree of protection, 
let us say, to domestic servants, or to casual workers. 

3. The Vicious Paradox in the Polity of Pressure Groups 

It appears to make no difference where collectivism of this 
sort begins. Whether it begins with tariffs for some manu- 
facturers, special laws for certain groups of workingmen, or 
bounties for farmers, the one certain thing is that in a demo- 
cratic society the granting of some privileges must be followed 
by the granting of more privileges. In fact it might be said 
that when modern states abandoned the Jeffersonian principle 
of special privileges to none they became committed to the 
principle of special privileges for all. 

Thus | tariff for one industry will make irresistible the de- 
mands of other industries for equal protection. At the- end of 
the process, very nearly reached by the United States in 1930, 


tariffs became universal and well-nigh exclusive against all 
products that can be made domestically. But such tariffs only 
mark the beginning. The agricultural interests will dejnand 
protection and bounties in order to achieve "parity." An ad- 
vanced system of labor legislation always demands the support 
of an exclusive tariff. Thus under the National Industrial Re- 
covery Act, which sought by federal laws, called codes, to ele- 
vate wages and working conditions, it was provided 6 that if 
"substantial quantities" of any article were imported and might 
"render ineffective" the "maintenance of any code," such im- 
ports could be prohibited. 

Now the effect of attempting to give protection to all the 
interests capable of bringing influence to bear upon the gov- 
ernment is to cancel out many of their special advantages. 
One tariff-protected manufacturer in an economy otherwise 
committed to free trade will, of course, obtain a substantial ad- 
vantage. But if the producer from whom he buys his raw 
materials is also given protection, some of the benefit is can- 
celed, for the costs of production are increased. If, then, 
bounties and tariffs have to be given to the farmers in order 
to protect them also, the first lobbyist not only has to con- 
tribute to the benefits out of his profits, but he finds that the 
cost of living has risen for his employees. When they organize 
to increase their real wages, more of his benefits are canceled. 

If the sole effect of this cumulative collectivism were to 
cancel out the special advantages of the various pressure groups, 
it might be regarded as a harmless method of letting them en- 
joy the appearance of special privileges while the community 
escaped the consequences. If, by making privilege universal, 
special advantages were neutralized; if, by giving one interest 
after another a special favor, all the interests came to be on an 
equal footing, the process might be silly, but it would not be 

6 Cf . Sec. 3 (e) of the National Industrial Recovery Act. 


dangerous. The believers in gradual collectivism seem to have 
some such comforting thought in the backs of their minds/ 

Hie notion of equal privileges for every interest has, as it 
happens, been elaborated into a scheme of social organization. 
It is known in Italy as the Corporative State. In Russia it is 
partially embodied in the Soviet system of government. And 
long before that the idea was adopted by several schools of 
social reconstruction, among them the guild socialists and syn- 
dicalists of many sorts. The theory of these schemes is that 
government should be "functional" rather than geographical 
that is to say, in the state each person should be represented 
as a worker rather than as a citizen. Many democrats have 
been attracted by the idea, thinking that the avowed representa- 
tion of particular interests would be better than the lobbying 
of pressure groups pretending to be disinterested patriots. 
They have been tempted to hope that the open avowal of all 
special interests would neutralize their self-regarding purposes 
into a realistic but harmonious conception of the general in- 

But the trouble with these schemes is that they sanctify the 
self-regarding purposes of special interests and do nothing to 
subdue them. , For many particular interests do not in any 
conceivable combination constitute the general interest; to en- 
trust the government of a nation to such a body would be to 
turn the sovereign power over to a coalition of its most power- 
ful interests. As a matter of fact, though the semblance of 
such a political organization exists in Italy, in Russia, and even 
in Germany, in none of these states is real power entrusted to 
it. The sovereign power resides in the dictatorship, and in 
fact only a dictatorship could hope to keep a chamber of special 

T This was the view current in the spring of 1933 when the New Deal 
programme under NRA and AAA was adopted. Every interest wai to be a 
monopoly and to have protection; it was hoped that the net effect would be 
to equalize privileges. 


interests from conspiring continually against the national wel- 

There is no reason to think that the self-regarding activities 
of special groups can be balanced or regulated by organizing 
more and more of them. In the historical period during which 
organized interests have been increasingly active and their ac- 
tivities have been treated as more and more reputable, there 
have been two momentous developments. By organized re- 
strictions of many sorts the production of wealth has been re- 
tarded, the method of monopoly being employed to enrich the 
favored interests. The imprimatur of respectability having 
been put upon organized privilege, the whole population has 
become imbued with the idea that as a matter of right every- 
one is entitled to invoke the law to increase his income. 

This is the vicious paradox of the gradual collectivism which 
has developed in western society during the past sixty years: it 
has provoked the expectation of universal plenty provided by 
action of the state while, through almost every action under- 
taken or tolerated by the state, the production of wealth is 
restricted. By these measures modern states have frustrated 
the hopes which their policies have aroused. They have put 
into effect measures of scarcity, and all the while they have 
taught the people to believe that the effect of the policy would 
be to give them abundance. To that paradox no small part of 
the dangerous tension in modern society is due. 

4. The Restriction of Wealth 

That a system of gradual collectivism, operating through 
tariffs and bounties, price fixing and wage fixing, must reduce 
the wealth of nations has seemed so self-evident to a long 
line of economists that one of them has been moved to say that 
"only the feeble-minded and the paid agents of vested in- 


tercsts will be found to deny such propositions." * Yet the 
proposition is denied in the practice of all modern states, and 
among the great mass of their inhabitants it is regarded as far 
from self-evident that to restrict production is to become de- 
liberately poorer. 

It is curious and significant, however, that while almost every 
interest favors collectivist measures, no one defends them all. 
Thus, for example, the processing tax on cotton levied in 
order to pay cotton planters to restrict their output and raise 
the price was invalidated in the Supreme Court as the re- 
sult of a lawsuit brought by a textile mill corporation which 
enjoys high tariff protection. 9 Manufacturers, who have the 
legal privilege of exclusive possession of the domestic market 
at more than a competitive price, have no difficulty in under- 
standing the objections to laws which create artificially high 
prices for their raw materials. They can see no less easily the 
fallacy of monopolistic union wage rates. All the reasons for 
respecting the law of supply and demand, all the arguments 
against monopoly, restriction, and scarcity, are self-evident to 
them except in the field where they themselves have an ex- 
clusive market under government protection. 

The managers of the great corporations are fully aware that 
the production of wealth is restricted by labor laws and labor 
contracts which enable their employees to do less work for 
more pay. But it is not so easy for them to see that when, by 
means of tariffs or a monopolistic control of prices, they restrict 
production and raise their prices above the competitive level, 
they too are practising a policy of scarcity. Though they will 
shut down their own plant rather than sell at a lower price, and 
will invoke tariff protection to prevent foreigners from sell- 
ing at the lower price, they nevertheless understand that the 

* Lionel Robbins, The Great Defression, p. 67. 


soundest principles of economics have been violated when farm- 
ers are assisted by the government to plough under cotton and 
slaughter little pigs, when wage earners insist on shorter hours 
at a high "prevailing wage." These same farmers, however, 
relying upon the full power of the government to raise their 
prices by restricting production, will in the same breath de- 
nounce the railroads and utilities for not expanding produc- 
tion by reducing the rates. 10 

Thus, in the debate which accompanies the advance of gradual 
collectivism, particular interests will be found advocating pro- 
tection for themselves and free trade for those with whom they 
transact their affairs. If the student is looking for a defense 
of the system, he can find it by assembling the arguments used 
by each interest in defending its special privilege. He can 
obtain a separate brief from some producer to justify every 
item in the tariff law, a separate brief from some corporation 
executive to justify every price fixed by monopolistic decision, a 
separate brief for each subsidy from the interest subsidized, for 
each restrictive law from the beneficiary. These briefs would 
be submitted by businessmen, fanners, labor unionists. They 
would be written by lawyers and economists and experts, some 
calling themselves conservative and others progressive, and 
they would provide an impressive defense of the system as a 
whole. But an equally impressive collection of separate briefs 
could be assembled, written by spokesmen for the same in- 
terests, denouncing as uneconomic, as immoral, as unconsti- 
tutional, often as treasonable and subversive, the same prac- 
tices when carried on by other interests. 

These self-contradictory pleadings are such glaring instances 
of man's ability to see the mote in his neighbor's eye and to 

10 Cf., for example, the price policy of the Tennessee Valley Authority, 
which has the batking of the farm bloc, with the price policy of the Agri- 
cultural Adjustment Administration. 


overlook the beam in his own that one is led to ask how the 
disinterested exponents of gradual collectivism can persuade 
themselves that they have a rational political philosophy. At 
the level of practical politics there is the pulling and pushing 
of interested groups contending for the assistance of the sov- 
ereign power. At .the level of popular debate there are the 
special pleas of interests, each insisting that the general interest 
will be served if the coercive authority of the state is placed at 
its disposal. The gradual collectivist has to suppose that over 
and above these special groups and their special pleadings, there 
exists a sovereign power able to discern the universal in the 
particular, arid to assert it with the force of law. He has to 
suppose that the electorate and its parliament have a criterion, 
presumably a body of principles, by which, after they have felt 
all the pressures and heard all the arguments, they can de- 
termine which imports to restrict, which industries and regions 
and occupations to favor, which prices and wages to fix and at 
what rate to fix them. 

It is important that we make clear to ourselves the real char- 
acter of the judgments which the method of gradual collectiv- 
ism requires of the voters and their representatives. They 
are not expected merely to interpret and enforce a system of 
established rights among vested interests. On the contrary, 
they are asked to create a series of new rights, some to replace 
old ones most of them, however, in addition to the old 
ones. Thus they destroy some vested rights and call into 
being others. The arbitrament required of a democracy under 
gradual collectivism is, therefore, a peculiarly difficult one. It 
calls "for the continual creation of new special privileges: it 
has to be assumed that the people and their parliaments can 
judge correctly which special privileges will be, and which will 
not be, for the general welfare. For under gradual collec- 
tivism the state does not merely enforce existing rights. Nor 


does it repeal privileges and liquidate vested interests. It es- 
tablishes partnerships in more and more fields between the gov- 
ernment and certain selected interests. The government has, 
therefore, to decide continually with which interests it will go 
into partnership and on what terms. 

The real nature of gradual collectivism was made extraordi- 
narily clear in the New Deal, as it existed before the Supreme 
Court of the United States invalidated it. Under the Na- 
tional Industrial Recovery Act, industries were encouraged to 
organize themselves as agents of the state. To each of these 
groups there was then delegated the power to legislate not 
only for all who were then engaged in that line of business 
but for all who might wish to engage in it. No clearer, no 
more naked, illustration could be offered of what is meant by 
the statement that gradual collectivism means the conferring 
of privileges upon selected interests. For the right to make 
laws and to enforce them by fines and imprisonment is the 
basic attribute of sovereignty, and the delegation of sovereignty 
to selected interests is exactly what the word "privilege'' means. 
In the case of the NRA privilege was conferred upon certain 
trade organizations and theoretically at least upon industrial 
employees also. 11 The industrial codes were in effect charters 
like those once granted to the East India Company, like 
those now granted to municipal corporations to exercise the 
sovereign power within a certain jurisdiction. 

Under the Agricultural Adjustment Act, and under such 
ancillary laws as the Bankhead Cotton Control and the* Kerr 
Tobacco acts, the conferring of privilege and the delegation of 
the state's authority to particular groups was not quite so 
nakedly evident. Nevertheless, that was the essence of the mat- 
ter. Out of all the farmers of America and among all the crops 
they produce, Congress selected seven staples, and authorized 

u Sec. 7 (a) and also the Wagner Labor Relations Act. 


the Secretary of Agriculture to levy taxes and to apply the 
proceeds in a subsidy to the producers of those seven staples. 
The producers of these selected commodities were established 
as a vested interest, protected by laws and by a subsidy in their 
right to produce their crop as against anyone who might wish 
to trespass upon their right to produce. It is significant not 
only that the established growers of the basic commodities were 
given a privileged position as against all other farmers, but that, 
among them, the cotton and tobacco growers had a specially 
favored position. Whether that was due to the fact that cot- 
ton and tobacco were peculiarly hard hi V or to the fact that 
they occupy a strategic position in the political composition of 
the Democratic Party, is perhaps a matter of opinion. But it is 
undeniably clear that the privileges were conferred approxi- 
mately in proportion to the influence of particular pressure 

This view of the nature of gradual collectivism is confirmed 
when we examine the efforts of the Roosevelt Administration to 
confer privileges of equal value on less powerful interests. 
The symmetry of the gradual collectivist conception, ordinary 
considerations of justice, and the personal sympathies of many 
of the New Dealers required, for example, that if great in- 
dustries like steel were to be given such extraordinary privi- 
leges, if great interests like that of the cotton planters were to 
be taken into partnership by the state, wage earners should also 
be given privileges. But the event showed that most wage 
earners were too weak to exercise the privilege which the gov- 
ernment attempted to confer upon them and that the govern- 
ment was not strong enough to make those privileges effective. 
The system broke down wherever powerful organized interests 
were lacking which could use the privileges the state was will- 
ing to confer. Thus, the railroad brotherhoods are able to 
use their entrenched position under the law. But agricultural 


laborers were offered no legal privileges and could not have 
used them had they been offered. For them the system of 
gradual collectivism could provide only charity* 

The gradual collectivist has to believe that a mass of special 
privileges can be distributed among interested groups in such 
a way as to raise the general standard of life. He has to be- 
lieve that an elected parliament will distribute its privileges 
according to some general conception of the public welfare and 
not according to the pull and push of organized interests. Is 
this conceivable in a democracy? It is conceivable, of course, 
under a dictatorship if it be granted that the dictator knows in 
general and in particular what is for the public welfare. It 
does not seem likely that an electorate, listening to the babel 
of special pleadings, would be able to detect the universal in- 
terest in the particular, except occasionally and by good luck. 
There may be, as Professor Carver has said, "at least a theo- 
retical possibility for improvement through restrictive regula- 
tion"} conceivably a a system of privileges is imaginable which 
would be so nicely designed and so delicately adjusted that it 
would raise the standard of life by increasing the production of 
wealth and improving its distribution." M But no economist 
has ever designed such a system and the chances are small that 
a democracy could see through the special pleadings, would be 
able to resist the pressures, and could know even with approxi- 
mate accuracy which interests to favor and in what degree. 
Perhaps if the experiment could be repeated often enough, 
under the law of chances a democracy might by trial and error 
hit upon the right system of privileges. But so, as an eminent 
philosopher once remarked, could a band of monkeys who had 
learned to hit the keys of a typewriter turn out a play of Shake- 
speare's if they kept at it through all eternity. 

For while a system of privileges might theoretically augment 
"Thomai Nixon Carver, Princiflts of National Economy, p. 467. 


wealth, the chances are overwhelming that most of the privi- 
leges granted will be reducible to a common denominator. 
With few exceptions they will be guarantees, backed by the 
authority of the state, that the beneficiaries will receive a larger 
private income for less effort* That means that those who are 
not beneficiaries will have a smaller income in return *or more 
effort On the whole, and in the ordinary run of human af- 
fairs, tariffs, subsidies, regulated prices, and wages are pro- 
moted by men seeking to obtain a larger income, not by pro- 
ducing more wealth but by obtaining a larger share of the 
wealth produced. "The aim and result of every price-fixing 
agreement, if effective/' says the Supreme Court, "is the 
elimination of one form of competition. The power to fix 
prices, whether reasonably exercised or not, involves power 

to control the market and to fix arbitrary and unreasonable 

11 1* 

Thus when a tariff duty prevents the domestic consumer 
from purchasing the most inexpensive steel that can be pro- 
duced in the world, the state has said that the nation must use 
more expensive steel. The nation must therefore be content 
with less goods of other kinds. The capital and labor and 
managerial skill devoted to making the more expensive steel 
are no longer available to make other goods. The same prin- 
ciple applies to the regulation of particular prices and particu- 
lar wages. If they are set high, and are effective, they exact 
a subsidy from others; if they are set low, the victims are 
sweated to subsidize others. Those who receive the subsidy 
obtain more income for less effort} those who pay the subsidy 
have less income for more effort. But since a system of gradual 
collectivism will always tend to favor the interests that are or- 
ganized, are identified, and are insistent, since they will be in- 

M See No. 273 U.S. 392, known as the Trenton Potteries Case. Cited 
in James Gerald Smith's Economic Planning and the Tariff, p. 149. 


sistent not because they wish to work harder but only because 
they wish to receive more by not working harder, the grand 
effect of the system is to diminish the production of wealth. 

No doubt it is sometimes hard to see how a particular measure 
in the system diminishes tHe production of wealth. There are 
some measures which have a negligible effect. There are many 
which cannot be enforced. In specific instances the pleas of the 
advocates are often so persuasive that to object on the ground 
of general principle seems foolishly doctrinaire. In the era 
of gradual collectivism it has been the fashion in philosophy 
to decry general principles and attend only to the apparent 
pros and cons in specific cases. But this is like attempting to 
examine the claims of every inventor of a machine for perpetual 
motion while rejecting as doctrinaire the second law of thermo- 

While it is not easy to discern the effect of every measure, 
the total effect of raising prices and wages by restricting mar- 
kets and limiting the division of labor is to reduce the produc- 
tion of wealth. 

5. Rising Expectations 

At the same time the people have been taught by the col- 
lectivists to believe that the government can and should make 
them richer. The farmers and wage earners who come asking 
for tariffs, bounties, monopoly in their markets, fixed prices 
for their goods and services, are merely following the example 
of the manufacturers who told them that protection produces 
prosperity and that concentrated corporate control produces 
stability and security. In a society which has adopted the col- 
lectivist view, there is a standing invitation to everyone to de- 
vise some method by which the authority of the government 
can be used to improve his income. For that reason the great 


teacher of collectivism has not been Karl Marx; it has been the 
example set by the men who, in the course of more than sixty 
years, have successfully invoked for their own profit the as- 
sistance of the state. It is not the socialist propaganda which 
has converted the nations; it is the practice of gradual col- 
lectivism which has caused the people to think that if some 
can be enriched by the action of the state, then all might be 
enriched by it. 

The older doctrine was that wealth is increased by labor, 
enterprise, and thrift, and that the way to a just distribution 
of income is through the repeal of privileges. It has been 
overwhelmed by the practical demonstration that some men 
prosper greatly when the government assists them. So the 
people have had it fixed in their minds that the state possesses 
a magical power to provide an abundant life. They have come 
gradually to think that their expectations may be as great as 
their government is powerful; that the stronger the govern- 
ment, the more certainly it can satisfy their heart's desires. 
After a while, when the doctrine is completely dominant in the 
popular mind, a point is reached where men cease to feel that 
there is any vital connection between production and consump- 
tion, between work and wealth. They believe instead that 
the vital connection is between wealth and the power of the 
state. It is no longer labor, but the law, the force of the state, 
the might of the government, that is looked upon as the source 
of material well-being, 

The belief in this miracle is due to an optical illusion. The 
power of the state, as such, produces nothing: it can only re- 
distribute that which has been produced. Even if the state 
runs a farm, as in Russia, or a hydroelectric plant, as at Muscle 
Shoals, the wealth created comes not from the government's 
power to command and coerce, forbid and defend, but from 
labor, invention, and the resources of nature. The reason why 


. the state appears by exercising power to create wealth is that it 
can enrich some members of the community* 

It is an old illusion. On the River Rhine, the most im- 
portant trade route of Central Europe, there were, in the 
twelfth century, nineteen stations at which tolls had to be paid. 
They were collected by armed forces gathered about the castles 
whose ruins still delight the tourist. Twenty-five more tolls 
were added in the thirteenth century and by the end of the 
fourteenth century their number had grown to approximately 
sixty-two or sixty-four. 14 

Many of these stations belonged to the Duchy of Cleves, and 
they were known as the "treasure." Now these tolls added 
nothing, of course, to the wealth of Europe, but they greatly 
enriched those who took the tolls. In this example, which 
is typical of all privileges, political force did not produce the 
"treasure." It exacted treasure from those who had produced 
it. The optical illusion arises because men mistake for the pro- 
duction of wealth the enrichment of those who take the tolls. 

The popular belief in the efficacy of the state has its empirical 
support in the fact that under various forms of protection and 
privilege, such as tariffs, bounties, franchises, patent monopo- 
lies, and .concentrated corporate control, many have undoubt- 
edly been enriched. . If they, why not others? Thus the un- 
privileged come forward demanding privileges too privi- 
leges to compensate them, to give them parity with, to give 
them equality of bargaining power with, to give them protec- 
tion from, those who enjoy the favors that the state bestows. 
For the inner principle of gradual collectivism and its radi- 
cal fallacy is that it does not dismantle the castles on the 
Rhine and abolish the privileged toll stations j it attempts 
vainly to turn every cottage into a castle with a toll station 
of its own. 

u Hcchchcr, of. cit., VoL I, p. 57. 


6. The Struggle for Power 

The attempt to universalize privileges, to create privileges 
for everyone, puts the stamp of official approval on everyone's 
expectation that the state can ensure his prosperity. At the same 
time, the measures of the collectivist policy, tariffs, bounties, 
fixed wages, fixed prices, guaranteed incomes, and the like, have 
the general effect of enhancing the real costs of production, of 
reducing the real efficiency of capital and labor, of subsidizing 
the high-cost producer at the expense of the low-cost. Thus, 
on the one hand, the state raises the people's expectations, and, 
on the other hand, it reduces their productivity. The state is 
expected to perform the miracle of providing everyone with a 
large and stable income $200 a month under the Townsend 
Plan M by universalizing the privileges of not producing as 
much wealth as efficiently as possible. 

Thus it has come about that under gradual collectivism the 
struggle for power has become ever more intense. As men 
learn that their fortunes depend increasingly upon their polit- 
ical position, the control of the authority of the state becomes 
a prize of infinite value. But because the multiplication of 
the privileges restricts the production of wealth and. perverts 
its distribution, the standard of living doe not rise in propor- 
tion to the expectations which have been aroused by the ex- 
ample of those who are enriched by privileges. Thus, as 
gradual collectivism advances, the .competitive struggle for 
privileges is exacerbated. It culminates in the condition now 
prevailing, where the internal conflict is transformed into a 
conflict for the redistribution of national power and privilege 
throughout the world. 

15 Under this plan persons over sixty years of age would be forbidden to 
produce and compelled to consume. 



/. The Road to War 

So long as the productivity of a nation is great, because its re- 
sources are ample and its people are industrious and skillful, 
moderate doses of collectivism can be absorbed. Even though 
wealth is not produced at full efficiency, there is a margin of 
safety. But there are countries where the natural resources 
are meagre, where there is a growing population imbued with 
the belief that it has the right and the power to achieve through 
the action of the state an improved standard of life. In these 
countries the paradox of increasing popular expectation with 
restricted production at home and abroad has provoked a pro- 
found social crisis. 

This is the plight of the nations, called the Have-Nots, 
which think of themselves as proletarian peoples denied their 
fair share of opportunity. Among them the world-wide system 
of gradually cumulative collectivism has reached its climax. 
Among them collectivism has ceased to be gradual, demo- 
cratic, and pacific, and has become fully militarized. It is 
because of the threatened aggression of these armed collectiv- 
ist societies that their neighbors are compelled to adopt a 
defensive militarism. In this international system, it is dem- 
onstrated not merely that total collectivism in one nation is total 
militarism, but that a world which has given itself over to col- 
lectivism must sink into militarism. 

This is the end of the road. After the liberal century, in 



which the very idea of wars of supremacy had been forgotten, 
the world is again entangled in the deadly challenges delivered 
by great powers to other great powers. Once again men are 
ready to fight for supreme power, having reverted to the be- 
lief that by the exercise of power they can improve their lot 

2. The Two Philosophies of Nationalism 

It is a rather significant fact that the tendency towards amal- 
gamation into larger political unions should have reached its 
climax approximately between 1 860 and 1 870. In that decade 
the American Union was preserved, the German and Italian 
states became united, the Danubian Empire established itself 
in the form which lasted until 1918, Canada achieved a federal 
union, and the British Commonwealth came irfto being. But 
after 1870 the movement for unification was arrested. 

The common assumption is that all the "nations" had by that 
time become united. However, there are a number of reasons 
for thinking that this is not a true explanation, but a rationali- 
zation after the event. It assumes that the amalgamation of 
peoples into larger unions depended upon fundamental affini- 
ties of speech, culture, ethnic homogeneity, and historical tra- 
dition in other words, that a national consciousness had to 
exist before national unity could be achieved. 

But if we study the unifications up to 1 870 we find many im- 
portant instances where strong political union preceded the ap- 
pearance of a strong national consciousness. That might be 
said of the states that entered into the United States, of the 
cantons that entered into the Swiss federation, of such unions 
as that of the Flemings and Walloons to form the Belgian state. 
We find, moreover, that in this historical period political union 
did not depend upon ethnic or cultural homogeneity; on the 
contrary, that peoples of different language, ethnic origin, re- 


ligion, and political history overcame their particularism and 
became politically united. 

It is even more significant that, beginning about 1870, a 
centrifugal tendency appeared and that for the past sixty years 
the principle of nationality has been invoked not to unite but to 
divide. As nationalism was understood before 1 8 70, the move- 
ment towards unification had by no means been completed. 
The political federation of Belgium and Holland, of the 
Scandinavian states, of the Balkan states, of the Central 
American republics, for example, was no more inconceivable 
to the older nationalists than the union of Prussia and Bavaria, 
of Piedmont and the Papal states, of the Flemings and Wal- 
loons, of the German-, French-, and Italian-speaking peoples 
of Switzerland. But these potential unions have not been 
realized. On the contrary many unions that existed have dis- 
integrated. Thus Norway and Sweden have separated} there 
are five successor states in the Danube basin, and six on the 
western marches of the former Russian empire. What i$ 
more, the centrifugal tendency is very strong even where the 
existing union has not actually been ruptured. There are sub- 
nationalist movements in Belgium by the Flemings, in Jugo- 
slavia by the Croats, in Czechoslovakia by the Germans and 
Slovaks, in Poland by the Ruthenians, in Spain by the Cata- 

The philosophy of nationalism has in this period been curi- 
ously transformed. Originating as a passion to overcome the 
particularism of petty states, it has since become the justify- 
ing principle of -particularism. Where once it supported the 
sentiments that liquidated conflicting loyalties, it now instigates 
the sentiments that accentuate separatism. Thus while the in- 
tellectual exponents of the current nationalist ideology imagine 
that they are carrying on the tradition of Washington and 
Hamilton, Cavour and Bismarck, they have in fact reversed 


it. The point they have missed is that the older nationalism 
reached out for unity among particularists by cultivating a com- 
mon consciousness, whereas the current nationalism emphasizes 
an increasingly exclusive particularism. So, while the older 
nationalism was the support of political unification, the newer, 
nationalism is the agent of disunion. 

There is, therefore, a profound difference between these two 
nationalist philosophies, the one inclusive in its tendency, the 
other exclusive. Under the older one a tenuous general sense 
of common nationality was invoked in establishing political 
unions. Then, because the unions proved to be beneficial, a 
much stronger feeling of common nationality developed. One 
has only to read the anxious admonitions in Washington's Fare- 
well Address to realize how little certainty he felt that the 
people would feel themselves to be not merely Virginians but 
Americans. The modern ideologists of nationalism, who are 
protectionist, collectivist, and authoritarian in their premises, 
have forgotten how little developed when the British, the 
French, the Americans, the Germans, and the Italians first 
achieved political unity was the sense of their nationality. See- 
ing only the powerful sense of nationality which has developed 
under these unions and as their consequence, they make the 
wholly unwarranted, indeed the false and destructive, assump- 
tion that only those should or can be joined together politically 
who already possess an overpowering sense that they are one 

They have turned history upside down. They argue that 
people can live together politically only if they have a strong 
national feeling, whereas the fusion of the innumerable wan- 
dering tribes into nations is inexplicable except on the hypoth- 
esis that national feeling develops from the experience of 
living together successfully. By treating strong nationalism 
as the antecedent condition rather than the consequence of poiit- 


teal union, the modern nationalists have given the world a 
doctrine which divides mankind into ever-smaller particularist 

It is worth noting that the nationalism which eventuated in 
larger political unions flourished in the interlude between the 
fall of the mercantilist conception of state policy and the revival 
of that conception. The period from, say, 1776 to 1870 was 
the golden age of free trade and of political emancipation 
throughout the western world. It was an age when the re- 
forming passion of men was centred upon the abolition of 
privileges, the removal of restraints, the restricting of the author- 
ity of the state. It was an age when men were dominated by 
the conviction that it was by the method of emancipation, rather 
than by authoritative planning and regulation, that mankind 
could most surely achieve its promise. And it was in that age 
of diminishing political interference that so many great political 
unifications were achieved. 

But about 1870, when the reaction against free trade began, 
the movement towards political unification was arrested and 
then reversed. The correspondence between the ascendancy, of 
the liberal philosophy and political unification, between the 
authoritarian revival and political disunion, is striking. The 
question is whether it signifies a real correlation of cause and 
effect or is merely a curious coincidence. 

The thesis that the diminution of authoritarian government 
promotes unity and that its increase is divisive could be fortified 
by many suggestive historic examples. One could cite the fact 
that the American Revolution took place at the culmination of 
the mercantilist regime, 1 and that the grievances of the colonists, 
as outlined in their Declaration of Independence, were in sub- 

1 It happens also that 1776 was the year in which Adam Smith's Wealth 
of Nations was published. The American revolt was a powerful advertise- 
ment of the truth* he taught. 


stance that an absentee government was exploiting them by 
restrictive and discriminating laws, that King George III had 
established "an absolute tyranny over these states . . . cutting 
off our trade with all parts of tKe world." It was the cumula- 
tion of these grievances that led to the "separation." One 
might then cite the fact that it was the discord of the separated 
states, each exefcising its own sovereignty, which led to their 
subsequent union. 

If we examine the powers expressly granted to the new na- 
tional government, the powers expressly denied to it, and the 
powers expressly^ taken away from the states, we find that the 
liberals who wrote the Constitution were inspired throughout 
by the conviction that, on the one hand, federal union was an 
escape from the vexatious particularism of the sovereign states, 
and, on the other, that a union could be maintained only if 
it, in its turn, was a drastically limited sovereign. Thus among 
the powers granted to Congress we find the exclusive right to 
regulate foreign and interstate commerce, a mighty provision 
against the practice of a mercantilist policy by the separate 
states; we find, too, the power "to coin money, and regulate the 
value thereof," to make uniform rules of bankruptcy. It is 
evident that the design was to establish free trade throughout 
the union, unobstructed by state tariffs, separate monetary sys- 
tems, and widely differing systems of commercial law. To 
make certain that the states would not become little mercantilist 
sovereigns on their own account, .they were explicitly forbid- 
den "to lay any impost or duties on imports or exports" in 
the interests of a separate economic policy.* Then in the Bill 
of Rights, which was the condition of ratification, the federal 
government in its turn was expressly denied the powers that 

9 Art. I, Sec. 10, par. 2. A state may lay them if they are "absolutely 
necessary for executing its inspection laws," bat the net produce must be 
handed over to the Treasury and "all such laws shall be subject to the re- 
vision and control of the Congress." 


were then recognized as the instruments of tyranny. In short, 
the union was a method of emancipating the people from what 
we should now call the regimentation of the separate states j 
the federal government was given the power to maintain free- 
dom of trade and intercourse and denied the power to estab- 
lish an authoritarian regime. Nor is it wholly irrelevant to 
note that the issue which was to imperil the preservation of the 
union had its origin in the use of political coercion to maintain 
and promote human slavery. 

American history does, therefore, lend weight to the hypoth- 
esis that there is a close connection between the diminution 
of state authority and the evolution of political unity. The 
presumption could be strengthened by innumerable other his- 
torical examples. It has often been demonstrated, for ex- 
ample, that the aggrandizement of the national monarchy in 
England and in France found its great support among people 
seeking emancipation from the intimate tyranny of petty princes 
and local magnates; it is well known that the unification of 
Germany and of Italy was the culmination of experiments in . 
customs unions and currency agreements and the like which rep- 
resented a longing for relief from parochial interferences. Nor 
is it irrelevant to note that the Hapsburg and Romanoff em- 
pires> the two most intricately governed, most centralizdl, most 
bureaucratic states of the western world, collapsed during the 
World War; and that both were dismembered. 

3. The Divisive Effect of Collectivism 

But these citations, though they are, I think, suggestive, are 
not proof. To show that authoritarianism divides and that lib- 
eralism unites, one must go beyond random historic examples 
to an explanation. It is only by understanding the reasons that 
the examples are convincing. 


If we take the simplest example of the authoritarian prin- 
ciple, a protective tariff, we have only to ask ourselves whether 
anyone would be interested in a tariff wall which encircled 
at a uniform height all the commercial powers of the world. 
Suppose that the British Empire, Germany, Japan, France, 
and the United States had one common tariff against the rest 
of the world, but no tariffs as against each other. Is it not 
obvious that the protectionists in each of these countries would 
say that this gave them no protection? They would insist 
that in order to make protection effective the trading area 
would have to be divided into national tariff systems. 

This is the logic of the process by which the use of political 
power to direct human affairs forces men to segregate them- 
selves into smaller and smaller communities. For only in so 
far as the protection is exclusive is it valuable. 8 Unless it 
creates a special privilege it is ineffective. Thus in a terri- 
tory as large as the United States, the national tariff alone has 
never given sufficient "protection" to those seeking the priv- 
ilege of more or less exclusive control of markets. They have 
supplemented the peripheral tariff with internal tariffs ap- 
plied through railroad rates, devices like the so-called Pitts- 
burgh plus, monopolistic agreements, local quarantine regu- 
lations, tand the like. The monopolist who would exclude a 
competitor must generally retire into a more exclusive strong- 
hold. The larger the area, the more precarious will be his 
monopoly, the more diluted his advantages. 

That is the reason why social legislation can be put into 
effect more easily in small states than in large ones, why those 
who sponsor such measures are apt to oppose not only free- 
dom of international trade but local autonomy within a free- 

> The effective reason for the granting of independence to the Philip- 
pines was the desire of certain American interests to put the Filipinos on the 
other side of the tariff wall. 


trade area as large as the United States, where, says Mr. Beard, 
"regions once industrial and prosperous have been blighted 
by the wholesale migration of capital to sections of cheapest 
production the lowest standards of life, unorganized labor 
easily regimented by employers, absence of labor legislation, 
exploitation of children, long hours, and social squalor in 
general." 4 The logic of this argument would call either for 
an exclusive tariff around every established manufacturing 
centre in the United States, or national legislation prohibiting, 
in effect, the more "backward" states from entering into com- 
petition with the industries of more "progressive" regions. 
Mr. Beard has the courage of his convictions. He recognizes 
that when, by the exercise of authority, prices are fixed above 
the competitive level the economic area must be contracted 
to exclude competitors. The principle was recognized in the 
National Industrial Recovery Act of 1933, a great collectivist 
measure which envisaged the organization of American in- 
dustry under a system of codes closely regulating production, 
prices, and labor conditions. The vital essence of the whole 
conception was that each codified industry would enjoy an ap- 
proximate monopoly of the American market, and that its 
monopoly profits would enable it to pay high wages. But in 
order to protect the monopoly, competitors had to be ex- 
cluded. Thus, in the more "advanced" codes, barriers were 
raised against new enterprises and new processes, and the 
whole establishment was then protected not by a mere tariff 
but by the power to lay an absolute embargo against any im- 

And so, because the increase of state regulation requires 
a more and more exclusive territory if it is to be effective, the 
early nineteenth-century dream of international socialism has 
given way to the twentieth-century nightmare of national so- 

* Of. dt n p. 78. 


dalism. Collcctivists of all descriptions socialists of the 
Second International! communists of the Third, fascists with 
Ihetr international congresses, democratic planners may 
cheer each other on across national frontiers and may exchange 
tracts and resolutions and propagandists, but the inexorable 
goal of all collectivism is the isolated and self-contained com- 
munity. That is not because mankind is unable to fraternize: 
it is because an authoritarian regime has to be exclusive. The 
great military autocracies of the seventeenth and eighteenth 
centuries were highly regimented mercantilist states 5 the most 
highly regimented mercantilist states of the twentieth century 
are military autocracies. 

The realistic, full-blown collectivists Stalin, Mussolini, 
Hitler are national collectivists j the internationalism which 
the idealists of socialism and communism cling to is, as Mus- 
solini and Hitler have proclaimed, a remnant of the nineteenth- 
century liberalism with its faith in the supra-national develop- 
ment of commerce, the arts, and human personality. This 
residual hankering for brotherhood is, as Stalin has demon- 
strated, a useful instrument of Russian policy abroad when it 
is not a downright nuisance at home. 

The increasing exercise of sovereign power is a centrifugal 
force in society. Collectivism moves towards autarchy, the 
totalitarian states towards isolation. The obverse of this rule 
is that emancipation, the removal of privileges and restraints, 
promotes political union, that large societies must be lightly 
governed, that an increasing freedom of trade and intercourse 
within a state makes for an increasing participation in the com- 
mon life of mankind. For the overhead direction of human 
affairs by the sovereign state is in the last analysis their reg- 
ulation by physical force: the sanction of the law resides ulti- 
mately in the power of the state to command and forbid under 
penalty of death. This power can be invoked only when it 


can be effective. It can be effective only where it cannot be 
challenged. The more writs the king issues, the less far do 
they run: the greater the number of those who will be disposed 
and able to resist them. Thus, as the state moves in the direc- 
tion of more elaborate and more intense intervention, it must 
contract its jurisdiction. 

When authoritarianism dominates policy, the line of evolu- 
tion is ever toward more exclusive but less comprehensive 
monopolies, more autocratic but more particularist states. It 
is, in short, a regression from the ideal of large political unions 
evolved within the larger world economy of the arts, the 
sciences, and commerce; it drives men backwards to such a 
congeries of petty, exclusive, tyrannical, and bellicose states as 
our fathers had supposed men would never see again. 

4. Proletarian Imperialism 

We have seen that people became habituated in the** belief 
that the state has the power to raise their standard of living,. 
When the state responded with collectivist measures restricting 
opportunity and diminishing the efficiency of'pt-od^ction, there 
was bound to be an intensified social conflict. ' It ^tl natu- 
rally least severe in those nations where th4\ma^inio|csafefy 
was greatest, where there was a consideraofc^fttt^us whidj, 
could be redistributed to satisfy popular 
in countries like Germany and Italy, especially 
been impoverished by the war, there was no adequate margin 
of safety, and an acute class struggle developed. This strug- 
gle was abated for a few years by foreign loans which were 
in effect subsidies made by the richer nations out of their sur- 
plus. But when these subsidies were cut off, the struggle was 
renewed fiercely. 

In its initial phases it appeared to be a class struggle accord- 


ing to the Marxian pattern. But in its origins and in its issue 
the German and Italian struggle did not conform to the Marxian 
hypothesis. It is true that there was an aggressive movement 
of the masses to encroach upon the property of the great land- 
lords and the large incorporated industrialists. But this was 
resisted and defeated by an armed insurrection ending in a 
coup d'etat The Marxian formula does not explain why at 
the crucial point the masses lost faith* in socialism. For in both 
Italy and Germany, fascism, however much it may have been 
financed and instigated by landlords and big industrialists, ac- 
quired a large popular following among those who, according 
to the Marxian interpretation, should have rejected fascism 
and adhered to communism. 

The event is explained, I believe, when we recognize that 
the Italian and German masses could not have improved their 
situation by seizing the estates and the factories, that on the 
contrary the only effect could have been to increase their 
misery. For there did not exist in the hands of the few any 
substantial amount of wealth which could be expropriated. 
The total national income was so meagre that a more equal 
distribution of it would not even theoretically have made any 
important difference. But above all, what income there was 
depended fundamentally not upon the natural riches of the 
country but on an extremely delicate and precarious human 
organization of labor, technology, credit, and management. 
Those who. seized a factory soon saw that they had obtained 
only an inert heap of bricks and steel: that this capitalist prop- 
erty was incapable of producing income except as part of an 
economy of credit and international trade that ceased to exist 
when the managers and directors had been ousted. Those who 
tried to be more moderate and attempted by legal methods to 
expropriate the shareholders and creditors and controlling di- 
rectors of these enterprises found that they were gaining 


nothing, but were in feet impairing the productivity of the 
industries. The socialist movement was able to bring the 
industrial machine to a standstill} it gave no evidence of being 
able to make the machine yield more for the people. 

Socialism was a failure in Central Europe because it sought 
to encroach on a capitalist order that was already almost com- 
pletely impoverished. In a rich capitalism, where there is a 
large surplus, some wealth can be redistributed. But a poor 
capitalism, like that of post-war Germany, has almost no re- 
serves whidhi can be tapped: the attempt to find them, whether 
by kw or by direct action, strikes not at excess profits but at 
capital assets, at working capital, and at those minimum profits 
without which capitalist production cannot be maintained. 
Now it is from the middle class that the executives and man- 
agers are recruited, it is the middle class who have their savings 
invested directly or indirectly in capitalist enterprises. Their 
savings and their income are drawn upon when the social services 
of the poor are financed by taxes or inflation. One can 
understand why socialism in these poor countries provoked a 
middle-class revolution. When industry was paralyzed by 
strikes and expropriatory laws, it was the middle-class indus- 
trial officer who lost his position and who saw his invested sav- 
ings impaired and his standard of living reduced by rising 
prices, increasing taxes, and the deterioration of the currency. 
He realized that in a poor country socialism, even of a gradual 
and democratic variety, does not mean merely the redistribu- 
tion of the profits of capitalism j it means the gradual paralysis 
of capitalism if carried far enough, its total destruction 
and the decline of the whole community to a proletarian 

Thus the members of the middle class came to realize that 
for their country at least, though in essence it is true of all 
countries, the deepest need was and is not a different 


distribution, but a greater production, of wealth. Once they 
had grasped that truth, if the situation was desperate and the 
struggle critical, they were disposed to follow leaders who prom- 
ised to crush a movement that was paralyzing what productive 
capacity the nation possessed. 

So the middle-class fascist became passionately anti-Marxist. 
But having gone so far, and realizing that there could be no 
real relief except through an increased production of wealth, 
he came up against the brute fact that the materials for in- 
creasing wealth did not exist within his frontiers, and that 
the world markets in which he could earn the money to buy 
those materials were greatly restricted or closed altogether. 
At this point he became not only an antisocialist but an aggres- 
sive nationalist. For, as he saw it, he was the victim of an 
economic encirclement, and unless he broke through he would 
be suffocated. 

With the instruments of the terror, censorship, and propa- 
ganda, the fascist leaders indoctrinated the mass with the view 
that their real enemies were not the privileged classes at home 
but the privileged nations abroad. The transition from the 
psychology of class war to that of nationalist war is a very easy 
one. The fascist appeal combines the emotions of patriotism 
with the grievances of the proletariat. Those who have been 
socialists become national socialists. The class war is diverted 
toward international war. The people, habituated in the class 
struggle to appeals calling upon them to fight for their rights 
and for better opportunities, to strike at privilege and oppres- 
sion, are told by the fascists that they must continue to fight, 
not as traitorous members of a class, but as patriots in a national 
cause. They do not have to stop loving their country, as 
orthodox international socialists are supposed to do. They 
can have for their leaders not mere workingmen and agitators, 
but all the best people in the knd princes, generals, and 


great gentlemen. It is the class struggle de luxe, with all the 
pomp and circumstance that the diffident poor find reassuring. 
As fascists they do. not have to fight on the barricades as soli- 
tary and helpless bands against the police and against troops 
whose weapons they know to be deadly. If in a dim way 
they realize that they will have to fight later in the trenches, 
they believe that at least the fighting will not be at their own 
front doorj the brunt of it, moreover, will be borne by very 
young men after their courage has been disciplined in barracks 
rather than by middle-aged men who have listened to socialist 

Thus, under fascism, the proletariat becomes imperialist 
and imperialism becomes proletarian. The nation, organized 
under military rule, prepares for a struggle against the nations 
which it looks upon as the wealthy landlords, the* monopolists, 
the privileged owners of the rich territories, natural resources, 
and main highways of the world. Communism and fascism 
are not only much alike as systems of government j they are 
alike in the inwardness of their purpose. When the basic natu- 
ral wealth exists within the national frontiers, as in Russia, 
the proletarian aggression is domestic; when the basic national 
wealth does not exist within those frontiers, as in Italy and 
Germany, the proletarian aggression is nationalized. It is 
turned outward beyond the frontiers, toward the conquest of 
the colonies and of the territories of more pacific but richer 

This explains what would otherwise be an inexplicable phe- 
nomenon, the alignment of communist Russia with the nations 
that arm for defense. The Russian communists have recog- 
nized that they have no need of conquests because Russia has 
ample natural resources. It is this fact, rather than the pacifism 
of the communists, which accounts for the adoption of a policy 
of nonaggression, thereby giving to militarized Soviet Russia 


a common interest, along with the British Empire, France, and 
the United States, in the present territorial boundaries of the 
world. On the other hand, because the fascist states do not 
have within their own borders wealth to meet the expectations 
of their people, no promises of nonaggression they can give are 
credible. So long as the principal nations of the modern world 
are committed to the principles of national .collectivism, the 
Have-Not powers are under compulsion to pursue an aggres- 
sive policy because the sources of wealth, to which they must 
have access in order to live as well as they believe they have 
a right to live, are under foreign sovereignty. 

5. The Revival of Total War 

It may be said that about the year 1900 the nations became 
aware that they were crossing the great divide, leaving behind 
them the promised land of progress in peace, to enter into an 
epoch of deadly struggle for mastery and survival. The 
turning point is most clearly marked by the challenge to British 
maritime supremacy formulated in the German Navy Law of 
November 1897. 

For several generations a general peace, broken only by 
short and local wars, had prevailed. During that peace Brit- 
ain exercised an unchallenged supremacy on the seas and pur- 
sued a policy of free trade. ~ The dominion which Great Brit- 
ain exercised over a quarter of the people of the earth, and 
the preponderant influence which she exercised on the European 
continent through the balance of power, were not felt to be 
intolerable because in matters of trade and of human rights 
Britain was committed to the principles of freedom. Even 
to the subject peoples of the empire, the Irish, the Indian 
nations, the Egyptians, the struggle for autonomy was never 
hopeless. It was always supported by a large body of British 


opinion and could always find its ultimate justification in the 
principles of the British state. When Britain ruled harshly 
and denied to the people of the dependent empire their human 
rights, she was violating rather than acting upon the British 
ideal in human affairs. Eventually those who were strug- 
gling for autonomy were bound to win, as in fact they have. 
In the realm of economic opportunity free trade prevailed; 
the empire was not a closed preserve for the benefit of British 

Within the framework of this international system, Ger- 
many, Italy, Japan, and the United States achieved their na- 
tional unity and made great material progress. The rise in 
the general standard of life was probably greater in that period 
than at any time before or since. There were wars; but they 
were local wars of short duration, more like duels to settle an 
argument than battles of life and death. During the Crimean 
War, for example, English merchants were allowed to import 
goods from Russia through neutral countries; a Russian loan 
to pay interest on Russian bonds was floated in the English 
market; and during that same war France invited Russia to 
participate in the Exposition of Arts and Industries. 6 Bis- 
marck's three wars were short, sharp, localized, and for lim- 
ited objectives. 

The conception of a total war such as Rome had waged 
against Carthage, or even such wars as those which England 
had waged against Spain, against the Netherlands, and against 
France until the fall of Napoleon was not entertained in 
the nineteenth century. The people of Europe did not feel 
that their lives, their liberties, their fortunes, and the pursuit 

* In spite of the great extensions of the British Empire in the nineteenth 
century, British trade with British countries was 26.3 per cent of the total in 
1854-1863 and 26.7 per cent in 1904-1913. Cf. Grover Clark's A Place 
in the Sun, p. 153. 

9 Robert C. Binkley, Realism and Nationalism, p. 176. 



of their happiness were bound up in a struggle for the po- 
litical mastery of the world. 

But the wars which began in 1914 differ in kind, not merely 
in degree, from the wars which were fought in the preceding 
century. To find wars of the same order, one would have 
to go back to the struggle between Spain and England, between 
England and Holland, between England and France, be- 
tween Rome and Carthage, between Athens and Sparta. They 
may conveniently be called total as distinguished from -limited 
wars. These are not fought for tangible stakes say the 
unification of a national state, or the acquisition of an Alsace- 
Lorraine or an African colony. In total war the issue is com- 
plete supremacy, the power to settle any issue by superior 
force. Total wars cannot end, therefore, except by the destruc- 
tion of the vanquished as an organized power in the major 
affairs of mankind, the fate that befell Carthage and Spain 
and Holland. Until the issue of supremacy is settled, men 
are doomed in an era of total wars to fight incessantly. There 
are intervals of armed truce, periods of recuperation, rearma- 
ment, and the regrouping of allies before the struggle is re- 
newed. But there can be no settlement. For total wars are 
fought not for specific objects, but for supremacy. 

In the war of 1914-1918 Britain and France were convinced 
that they were fighting such a war; that, if they lost, Germany 
would deal with them as Rome dealt with Carthage. In the 
dictated peace of 1919 at Versailles they in their turn sought 
to impose a Carthaginian peace upon Germany. Clemenceau 
and Foch felt that they had failed to win the war when they 
were prevented from dismembering the German Empire, 
from exacting tribute which would keep the Germans pros- 
trate, from occupying Germany as a conquered province. In 
1933 the allies of 1914 again became convinced that Germany, 


renascent under Nazi leadership, would in its turn seek to 
annihilate all rival powers in Europe* 

These total wars should not be confused with limited wars 
like the Crimean, like the Danish, Austrian, and French wars 
waged by Prussia, much less with colonial wars like the Boer 
or the Spanish-American. It is an open question, it seems to 
me, whether even the Napoleonic Wars are to be regarded as 
total wars. For, while the victory of Bonaparte would have 
given him the mastery of the European world, his defeat was 
followed by a peace which was most remarkable in that it was 
not a Punic peace. The Congress of Vienna not only did 
not mutilate France} it did not even attempt to destroy France 
as a great power. 

It used to be the fashion to heap scorn upon the Congress of 
Vienna. But in the longer perspective, considering the cen- 
turies of incessant wars between England and France, consider- 
ing the state of Europe since 1914, it would now appear that 
the Congress of Vienna made a settlement which was unique 
in the history of great wars. It may be that the refusal to 
destroy France as a European power, that the willingness to 
live with her and let her live, reflected that great change in 
human opinion which crystallized during the eighteenth cen- 
tury in the liberal doctrines of free trade and the rights of man. 

In any event, the dominant fact in the contemporary world 
is the return of the European and Asiatic great powers to the 
conception of total war. It is this fact that needs to be 
thoroughly understood, for otherwise the effort to preserve the 
peace is doomed not only to be frustrated but actually to aug- 
ment the violence and frequency of wars. A pacifist movement 
. which has not clearly grasped the essential difference between 
the era of total war in which we find ourselves and the era 
of limited wars which preceded it will merely confuse and 


disorganize the peoples who are in mortal danger and thereby . 
invite the aggressors to proceed. 

6. International Security and Total War 

The manner in which pacifist opinion has misconceived the 
real nature of the problem can be seen in the series of pacts 
signed in the name of collective security. The Covenant of 
the League of Nations, for example, provides a method of 
settling international disputes based entirely on the assumption 
that all potential wars are limited wars. The machinery of 
peaceable adjustment is conceived on the analogy of lawsuits 
as a substitute for the duel, on the premise that violence can 
be eliminated by interpreting contracts or compromising claims. 
The Covenant envisages wars as contests dealing with justiciable 
issues, or at least with specific collisions of interest. But the 
war of 1 9 1 4, the Japanese advance into Asia, the Italian advance 
into Ethiopia, and the Nazi conception of the German destiny T 
have national supremacy as their real objective. 

The postulates of the League, on the other hand, being de- 
rived from the experience of the liberal nineteenth century, do 
not even begin to deal with the issue of national supremacy. It 
is not an issue that can be taken to the World Court or dealt 
with by votes in the Council and Assembly. Collective security, 
as it was organized after the war of 1 9 1 4, rested on the assump- 
tion that the issue of national supremacy would not be raised, 
more particularly that Germany was altogether too much pros- 
trated to raise it again. 

f Cf. passage from Hitler*! My Battl*: "For Germany the coone to be 
adopted is dear. She must never allow two Continental Powers to arise 
in Europe. She must regard any attempt to organize a military Power 
on her frontiers, even though merely in the form of a State capable of be- 
coming military, as an aggression against Germany, and must consider it 
not only a right, but a duty to prevent it by every means, even to the extent 
of taking up arms." P. 286, 


.In the Kellogg-Briand Pact this illusion is most clearly ex- 
hibited. For in that pact nations voluntarily renounced the 
ambition to resort to war as an instrument of national policy, im- 
plying that those who had world power would keep it, that 
those who did not have world power would not seek it. 
There is pathos in the Kellogg Pact. For it embalms an ideal 
of international relations that was by no means unrealizable 
had the world remained faithful to the ideas of public policy 
which were current when Mr. Wilson, Mr. Kellogg, and 
M. Briand went to school. The pacific settlement of limited 
wars is a practicable ideal, and mankind might well have 
entertained the hope that it would gradually limit Such wars 
until eventually it abolished them. 

The post-war system of collective security was devised by 
British and American publicists and statesmen acting on the 
preconceptions of the nineteenth century. It is not accurate to 
say, as so many have said, that they intended as citizens of the 
dominant and "satisfied" powers to freeze the world for all time 
in statu quo. On the contrary, they were quite prepared for, 
were in fact prejudiced in favor of, great alterations in the po- 
litical constitution of mankind. They promoted the rise of new 
national states not only as measures of war to disrupt Germany 
and Austria-Hungary: the sponsors of the League were on the 
whole also the supporters of Irish, Indian, and Egyptian na- 
tionalism, of the autonomy of the Dominions, the independence 
of the Philippines, of the renunciation of American hegemony in 
Latin America. They even hoped through the method of 
mandates to strike at the idea .that colonies were national prop- 
erties. They hoped to lower economic barriers 8 between na- 
tions, and to bring about the reduction of armaments 9 to a point 
where they would be little more than a domestic police force 

f Point III of Woodrow Wilson's Fourteen Points. 
f Article VIII, Covenant of the League of Nations. 


or a territorial militia* In substance, the sponsors of the League 
were prepared to relinquish more and more of the prerogatives 
of their own mastery of the world, to liquidate by generous, but, 
as they believed, enlightened concessions the prerogatives of 
their own supremacy. 

The pacific system which they envisaged was one in which 
existing rights were to be regarded as the public law of the 
world and enforced 10 until amended by concession and com- 
promise. 11 They founded their system on the premise that dis- 
content with the existing international order would arise from 
specific grievances, some of which were justiciable, some arbi- 
trable, the rest capable of being rectified or compromised. But 
what the sponsors of the League did not envisage was discon- 
tent arising from the ambition to exercise the supremacy which 
they possessed. They were prepared to contemplate the re- 
linquishment of more and more of the prerogatives of their own 
supremacy 5 but they did not propose the transfer of their 
supremacy to new empires. They hoped to rule the world 
lightly, to exercise their world power so magnanimously that* 
all the world would assent to it, but having just defeated Ger- 
many's attempt at world power, they intended to hold on to 
their own world power. Rather they than someone else. 
They reasoned, not without prejudice of course, but plausibly, 
that no one was any better fitted than they to exercise world 
power. So they made many proposals to limit armaments by 
the method of ratios under which the relative power of the great 
states was to be recognized by treaty. 

Thus the post-war system of collective security proposed to 
conserve the existing order of things in the field of ultimate 
power, but to concede an increasing equality of rights in all other 
fields. This was in essence the international system of the nine- 

30 Articles X and XI, Covenant of the League of Nations. 
11 Ibid., Article XIX. 


teenth century. Supremacy was exercised by an empire so 
much committed to the principles of free trade, national au- 
tonomy, cultural self-determination, and personal liberty that 
when the empire violated its principles in Ireland, for ex- 
ample, in Egypt, and in India, it was morally on the defen- 
sive among its own people. The League of Nations was to 
be in substance a perpetuation of that order of things: Great 
Britain and the United States were to form a partnership, 
exercising, under the postulates of liberalism in other mat- 
ters, a joint supremacy in the realm of power. 

The event showed that the policies of the great powers 
did not correspond with the postulates of the international 
system they had designed. This was revealed at once in the 
terms imposed upon the vanquished nations. The military 
and economic clauses of the treaties, and certain of the terri- 
torial provisions as well, were designed to keep them for at 
least a generation weak and disorganized, and in a status of 
moral inferiority. The vanquished were treated as, presum- 
ably, they would have treated their enemies had they victori- 
ously achieved world supremacy. But in imposing a Punic 
peace, the Allied and associated powers demonstrated that 
they were no longer acting on the nineteenth-century prin- 
ciple of supremacy restricted in its exercise by the tenets of 
liberalism. By the terms they dictated at Versailles, terms 
appropriate to the conception of total war, terms which had as 
their objective the perpetuation and exaggeration of their own 
supremacy, they committed Europe to a struggle for suprem- 
acy rather than to the settlement of specific grievances. 

The dictated peace was followed by the American rejection 
of the partnership in so far as it entailed responsibilities for 
the enforcement of the European settlement. But the United 
States did not reject partnership in supremacy. The United 
States rejected the League. It ratified the Washington treaties. 


Under these treaties supremacy at sea was shared with Brit- 
ain, and in the region of the Pacific and Eastern Asia this su- 
premacy was to become the guardian of existing rights. Simul- 
taneously, the United States drastically restricted its own 
markets against imports of foreign goods and then used its 
financial and political power to promote its exports. Other 
nations followed the same course* Thus supremacy in the 
realm of power was unmitigated anywhere by a liberal policy. 
The masters of the world were completely imbued with the idea 
that power may be used to create prosperity through privilege. 

Yet their institutions for the maintenance of peace were 
founded on a diametrically opposite conception of public pol- 
icy. The system of collective security envisaged an order in 
which privileges would be steadily reduced, in which the ques- 
tion of who had the ultimate power would become less and 
less important. But the minds of men had become thoroughly 
impregnated with the belief that the state could through its 
power make them prosperous. Therefore the control of the 
state at home, its power abroad, became the foci of universal 

Under the liberal conception, dominant in the practice of 
the nineteenth century and formally enacted into the treaties 
of collective security, the threat of total wars for supremacy 
was to be ended by liquidating the privileges that made suprem- 
acy valuable to those who possessed it and onerous to those 
who did not. The liberals had said, in effect, that men would 
cease to fight for political power when they became indifferent 
to it, and that they would become indifferent when its influence 
on their lives was negligible. This was how the religious wars 
had ended when men no longer believed that eternal salvation 
could be determined by the force of the secular arm. But in 
matters of income, of trade, property, and wages, the post-war 
generation believes fervently that earthly salvation can be 


determined by the secular arm. Thus supremacy, instead of 
becoming a matter of indifference in men's feelings because it is 
increasingly negligible in fact, has become the paramount and 
all-embracing issue of their lives. 

When supremacy is the issue, the world is in a period of total 
wars in which there can be no decision except by the .extinction 
of one of the antagonists as a power in affairs. This issue is 
not justiciable nor can it be compromised. When it exists, 
peace is only an armed truce during which the warriors pre- 
pare for the next battle. Then the normal condition is not 
that of peace, occasionally interrupted by a local war. When 
the question of supremacy is raised, there is a condition of con- 
tinuing war with intervals in which there is no fighting. 




7. The Outlawry of War by the Modern Conscience 

THE modern revival of total wars has occurred in an age when 
almost all men feel intuitively that wars are a monstrous anach- 
ronism. This marks a revolutionary change in the human 
outlook. For not until the nineteenth century did men in the 
mass come to regard war as utterly irrational and immoral. 
There had been protests by minor religious sects j during the 
seventeenth and eighteenth centuries there was some effort to 
limit the scope of wars, and there was an increasing amount of 
more or less academic speculation about schemes for perpetual 
peace. But pacifism as a general human conviction affecting 
the practical conduct of governments is something new in west- 
ern civilization. 

Only a hundred years ago, for example, the citizens of Lon- 
don felt they were honoring Lord Chatham when they erected 
a monument bearing the inscription, written by Burke, that under 
his administration "commerce for the first time" had been 
"united with, and made to flourish by war." To-day, when 
men hear Mussolini saying that "war alone brings up to its 
highest tension all human energy and puts the stamp of nobility 
upon the people who have the courage to meet it," l when 
they hear Hitler saying that "in everlasting battles mankind has 

1 Cf. "International Conciliation No. 306," p. 7. Published V b 7 Carnegie 
Endowment for International Peace. 


achieved greatness j in everlasting peace it would be doomed to 
destruction," 2 they are not much less startled than if they 
heard eulogies on chattel slavery and the exposure of newborn 
infants. For though all nations still prepare for war, and 
though most of them still pursue policies that cause wars, war 
as an instrument of national policy has been outlawed in the 
conscience of modern men. 

So radical a change in human feeling is not likely to have 
been the result of sudden enlightenment and spontaneous good 
will. For modern wars, once begun, are as savage as any that 
men have ever fought j there is then no reason for thinking that 
the modern revulsion against war is due to a change in human 
nature. Nor can this revulsion be ascribed to a general recogni- 
tion that modern weapons are terrifically destructive. As a mat- 
ter of fact, the physical devastation of modern wars is usually 
exaggerated. For while guns and bombs and gas do maim, kill, 
and destroy on a great scale, the capacity of a modern nation to 
repair the damage is also very great. The devastated regions 
in the battle areas of the World War were reconstructed in a 
very few years, and while, humanly speaking, the individual 
dead are irreplaceable, their numbers are soon replenished. 

We come closer to the truth when we remember that in the 
Great War more human beings were maimed and killed by dis- 
ease and famine than by weapons, and that this maiming and 
killing continued for years after the armistice. Moreover the 
destruction of property in battle was a very small part of the 
destruction of wealth. Germany and Britain, for example, 
were never invaded by a hostile army; yet in both countries the 
capacity to produce wealth was deeply impaired, and still is, by 
the dislocation of the markets and the sources of supply to 
which their economies had been adjusted. The havoc of a 
modern war is infinitely deeper and more far-reaching than 

1 M*in Kamff. Cited in Florinsky, of. tit., p. 73. 


the casualty lists and the devastation of the war zone. The ir- 
reparable damage only begins when the whole nation is mobi- 
lized and the war is carried to the civilian population by block- 
ade and by aerial bombardment. The lasting damage is caused 
by the war itself when it ruptures and dislocates the economy to 
which all the belligerents belong. 

For all great wars are now civil wars. They are not battles 
against an alien foe but internecine struggles within one closely 
related^ intricately interdependent community. Modern war 
tears apart huge populations which have become dependent 
upon one another for the maintenance of their standard of life 
in some degree, for the maintenance of life itself. That is 
why modern war is so devastating to victor and to vanquished 
alike. That is why war can no longer be employed success- 
fully as an instrument of national policy. 1 That is why those 
who preach and provoke war are regarded as rebels against the 
peace and order of the community of peoples, and why, in at- 
tacking their prey, they arouse the encircling hostility of that 
whole community of nations. That is why pacifism has so re- 
cently ceased to be an other-worldly aspiration and has become 
the working doctrine of practical men. For it was in the nine- 
teenth century that the self-sufficiency of nations, of local com- 
munities, and of individuals, gave way to a deep and. intricate 
interdependence. Men found themselves living in a Great 
Society. 4 

2. The Division of Labor 

It is no exaggeration to say that the transition from the rela- 
tive self-sufficiency of individuals in local communities to their 
interdependence in a world-wide economy is the most revolu- 

* Cf. Sir Norman AngelTs The Great Illusion. 
4 Cf Graham Wallat's The Great Society. 


tionary experience in recorded history. 9 It has forced mankind 
into a radically new way of life and, consequently, it has un- 
settled custom, institutions, and traditions, transforming the 
whole human outlook. 

No exact date can, of course, be fixed as the beginning of 
this revolution. It can be traced back to the close of the 
Middle Ages, though, of course, in the Roman world a com- 
plex exchange economy prevailed until the Dark Ages. But 
about the middle of the eighteenth century men of our cul- 
ture first began to experience enough significant change in 
their daily lives to realize that they were entering a new epoch 
in human affairs. The realization came first of all to the people 
of England and Scotland, for they were the first large western 
communities to augment their wealth by losing their local self- 

Yet at the beginning of the eighteenth century, even in Eng- 
land, the sustenance economy of the village was still the rule. 
While there was some interlocal and some international trade, 
it was unimportant in size and above all in its character, being 
concerned only "to a comparatively small extent with the trans- 
port of necessaries or prime conveniences of life. Each nation, 
as regards the most important constituents of its consumption, 
its staple foods, articles of clothing, household furniture, and 
the chief implements of industry, was almost self-sufficing, 
producing little that it did not consume, consuming little it did 
not produce." 6 The export trade of England in 1730 con- 

* "Humanity developed the exchange habit very late and . . . by primitive 
peoples . . . peaceful exchange is at best an exceptional practice. Even the 
Carthaginians, according to Herodotus, still found peoples in the Mediter- 
ranean area with whom they could deal only by depositing goods on the shore 
and withdrawing." Cf. Frederick L. Nussbaum's A History of the Eco- 
nomic Institutions of Modern Europe, particularly Ch. 1, 2. This book is 
based on Werner Sombart's Der Modeme Kapitalismus. 

6 John A. Hobson, The Evolution of Modem Capitalism, p. 32 (1910 
ed.), (London: George Allen & Unwin Ltd.) 


tinued to be "woolen goods and other textile materials, a small 
quantity of leather, iron, lead, silver and gold plate, and a 
certain number of reexported products, such as tobacco and 
Indian calicoes. The import trade consisted of wine and spirits, 
foreign foods, such as rice, sugar, coffee, oil, furs and some 
quantity of foreign wool, hemp, silk and linen-yarn as material 
for our specially favoured manufactures." 7 But it is even 
more significant that the internal trade of England was carried 
on predominantly in more or less self-sufficing districts. "The 
internal trade," says Hobson, "between more distant parts of 
England was extremely slight." 8 The carriage of goods was 
difficult; "agricultural produce was almost entirely for local 
consumption, with the exception of cattle and poultry, which 
were driven on foot from the neighbouring counties into London 
and other large markets." On the whole, industry was oper- 
ated for local markets. Moreover, within the districts there 
was, compared with later times, relatively little specialization 
by individuals. The weaving industry of Norwich, for example, 
"was executed in the scattered cottages over a wide 'district." 
For more than a hundred and fifty years the revolution which 
converted these relatively independent and self-sufficing local 
communities into specialized members of a great economy has 
been proceeding at an accelerating tempo. In the struggle for 
survival the less productive economy of self-sufficiency has not 
been able to withstand the superior effectiveness of a mode of 
production which specializes in labor and natural resources, 
and thereby promotes the use of machinery and mechanical 
power. In some degree the world-wide division of labor has 
been checked by tariffs, immigration laws, and other barriers 
to the movement of capital and labor. But they have only 
retarded the process. Inside the nations which consider them- 

p, 40. 
/**/., p. 45. 



selves most civilized there are now few communities left which 
are in any substantial sense self-sufficing. The self-sufficing 
household has virtually disappeared. Some nations, taken 
as a whole, depend less on foreign trade than others, but none 
could even begin to maintain its present standard of life if it were 
isolated from the rest of the world. 

Yet the revolution is by no means completed. Only in re- 
cent decades has it begun to penetrate the great populations of 
Asia and of Africa and of South America. It would, more- 
over, appear to be an irresistible revolution. 

The revolution, which still engages the whole of mankind 
and poses all the great social issues of the epoch in which we 
live, arises primarily from the increasing division of labor in 
ever-widening markets; the machine, the corporation, the con- 
centration of economic control and mass production, are sec- 
ondary phenomena. When I say that they are secondary, 
I mean that the inducement to invent and install machines 
exists only when men have already begun to specialize their 
industry for a wide market. And while it is true that the 
machines themselves promote the specialization, the funda- 
mental fact is that machines are not invented until labor is 
already specialized. The famous inventions in the English 
textile industry which are so often regarded as the immediate 
cause of the industrial revolution were made by "practical 
men, most of them operatives immersed in the details of their 
craft, brought face to face with some definite difficulty to be 
overcome, some particular economy desirable to make." * The 
process of invention became cumulative as the textile industry 
expanded. But it is clear enough, I think, that invention be- 
gan in the one industry which was already most specialized. 


9 Hobson, of. cit. y p. 80. Hobson also notes that scientific men, "strictly 
so-called, had very little to do with these great discoveries^ Among the 
great textile inventors, Cartwright alone was a man leading a life of thought." 


The same observation holds for the corporation. It did not 
come into general use as a form of industrial organization 
until the middle of the nineteenth century when the division 
of labor was still more advanced. 

Only by recognizing the primacy of the division of labor in 
the modern economy can we, I believe, successfully distinguish 
between truly progressive and counterfeit progressive phenom- 
ena. If we are to find our way through the practical diffi- 
culties and the intellectual confusion of our time we must go 
back to the first principle of the economy in >yhich we live, 
and fix clearly in our minds that its determining characteristic 
is the increase of wealth by a mode of production which de- 
stroys the self-sufficiency of nations, localities, and individuals, 
making them deeply and intricately interdependent. 

3. The Cultural Lag 

For more than a thousand years after the disintegration of 
the Great Society in the Roman world, the western peoples 
lived in small, relatively self-contained communities. To that 
kind of existence our traditional habits and preconceptions, our 
customs and institutions, have been adapted. Our social in- 
telligence has been shaped to a mode of life which was or- 
ganized on a small scale, and, in respect to the duration of any 
particular generation, ,was static. But the industrial revolu- 
tion has instituted a way of life organized on a very large 
scale, with men and communities no longer autonomous but 
elaborately interdependent, with change no longer so gradual 
as to be imperceptible, but highly dynamic within the span 
of each man's experience. No more profound or pervasive 
transformation of habits and values and ideas was ever im- 
posed so suddenly on the great mass of mankind. 

The whole experience of the epoch since the revolution 


began, from the diplomacy of the Great Powers to the subtlest 
and most intimate issues of religion and taste and personal 
relationship, has been radically affected by this transforma- 
tion of the way men live. Thus there is no secular govern- 
ment which to-day resembles except in outward form any 
government of the pre-revolutionary era. Most of the gov- 
ernments that existed in the eighteenth century have been 
overthrown j some few have been peaceably reconstructed. But 
all of them have been fundamentally altered. State, law, 
property, family, church, human conscience, conceptions of right 
and wrong, of status, of expectation, of need, have all been 
unsettled. This revolution at the foundation of men's ex- 
istence has called for a stupendous readaptation of the human 
race to a strange and puzzling material and social environ- 

The readaptation is, of course, slower than the revolutionary 
changes, and therefore at all times in this epoch there has been 
what sociologists call "a cultural lag" that is to say, men 
have brought to the solution of present issues ideas and habits 
appropriate to a situation that no longer exists. Like passengers 
looking backward from the end of a swiftly moving train, they 
have seen only the landscape which they have already passed 
by. Multitudes of men have had to readapt themselves not 
merely to a new mode of existence but to one in which the 
newest situation has soon been transformed into a still newer 
one. It has not been easy, and the sense of spiritual confusion, 
frustration, and insecurity which has pervaded all of modern 
culture has truly reflected the misery and the difficulty of the 

Men have not known whether to bless the new order or to 
curse it, and whether they did the one or the other has de- 
pended upon which aspect of the revolution they chose to dwell 
upon. To multitudes it has brought a very great improve- 


meat of their standard of life; to others a brutal disruption 
of their habits. Thus to some the nineteenth century seemed 
a century of progress, to others a century of degradation. 
Ample testimony could be given to support either view. For 
the division of labor produced much mdre wealth. But it 
also produced a proletariat. The division of labor made men 
interdependent and therefore founded their prosperity on the 
principle of peaceable collaboration with reciprocal benefits. 
But it also made them dangerously insecure against those who 
did not collaborate. 

Thus the revolution has been marked by an endless series 
of disconcerting paradoxes. There was progress and poverty. 
There was democracy and insecurity. There was the inter- 
dependence of nations and their fiercely competitive imperial- 
ism. There was legal equality and social inequality. There 
was a great moral enlightenment which abolished slavery and 
caste, enfranchised men and women, purged and elevated 
the treatment of criminals, provided schools and universities 
open to all, liberated conscience and thought from the cen- 
sorship of authority., And, on the other hand, there were 
the newly rich who were far less attractive lords of creation 
than the nobility whom they supplanted; there were the mul- 
titudes in the great cities, uprooted from the soil, deprived 
of their ancestral traditions, without significance to dignify 
their lives or faith to console them. 

In the fullest sense of the term, the industrial revolution 
is a revolution. It is the general revolution of which the 
specific revolutions from CromwelPs onward have been inci- 
dents. The accelerated phase of the revolution has now lasted 
for approximately five generations, and while for short periods 
in favored places there has been some tranquillity, it is cer- 
tain that it will take many more than five generations to com- 
plete the revolution. In much more than half the world the 


displacement of the self-sufficient economy has just begun. 
That displacement will continue. No Gandhi can withstand 
this tide in men's affairs. Nothing can prevent the whole of 
mankind from being drawn out of its ancestral isolation into 
the world-wide economy of interdependent specialists. For 
the new mode of production is incomparably more efficient in 
the struggle for survival. The men who adopt it not only grow 
wealthier than those who do not, but they overrun and dominate 
those who do not. So the revolution will continue. But 
since it requires not only an alteration of the economy but a 
readaptation of human nature and of usage, it will be a long 
time before men have caught up with their changing circum- 
stances and have acquired the necessary knowledge to remake 
their habits and their institutions accordingly. 

4. The Collectivism Counter-Revolution 

And therefore, as the revolutionary transformation pro- 
ceeds, it must evoke resistance and rebellion at every stage. 
It evokes resistance and rebellion on the right and on the left 
that is to say, among those who possess power and wealth, 
and among those who do not. The movement of the left is 
socialistic and tends logically toward communism. The move- 
ment of the right, composed of men of property in alliance with 
statesmen and soldiers, operates through economic nationalism, 
preemptive imperialism, corporate monopoly, and becomes in 
its extreihe and desperate form what is now called fascism. 
Though these two movements wage a desperate class struggle, 
they are, with reference to the great industrial revolution of the 
modern age, two forms of reaction and counter-revolution. 
For, in the last analysis, these two collectivist movements are 
efforts to resist, by various kinds of coercion, the consequences 
of the increasing division of labor. 


In order to demonstrate this thesis, it will be necessary to 
remind ourselves of the first principles of the new economy which 
men have begun to practise on a large scale during the past 
hundred and fifty years* 

It is not, as was the ancient economy, regulated by custom. 
That is to say, wealth is no longer produced by men who in- 
herit from their fathers a plot of land, their station in society, 
their occupation, or a tradition of craftsmanship. In the mod- 
ern economy, not only is the occupation of each man much 
more highly specialized, but, what is more significant, his 
choice of occupation and his success in practising it are regulated 
not by established usage but by fluctuating prices established 
in very extensive markets. The ancient economy may be said 
to have been one in which production was carried on for use. 10 
Men produced directly for their own consumption, or at least 
for the reasonably fixed and well-known needs of a few regu- 
lar and identified customers. In the modern economy the 
personal motive of production is profit that is, to sell the 
article for more than it has cost; goods are consigned not to 
the producer's own household or even to regular and identified 
customers, but to a distant and impersonal market. 

The prices which a man's products fetch in those markets 
determine whether he will prosper or fail that is to say, 
whether he has invested his labor and his capital successfully. 
The market is, therefore, the sovereign regulator of the spe- 
cialists in an economy which is based on a highly specialized 
division of labor. It does what the planning board is sup- 
posed to do in a planned economy. It determines by offering 
high prices for certain goods that more of them shall be pro- 

10 " c So much wine and salt came to oar monastery/ says Caesar of Heis- 
terbach, 'that it was simply necessary to sell the surplus.' " Cf. Nuisbaum, 
of. cit. y p. 32. "Caesar thought of the function of the monastery's estates 
as being primarily to supply the monastery. Only a surplus created the 
'necessity* of selling some of the product." 


duced. By means of high prices the market calls upon more 
men to apply their labor and their capital to the production of 
such goods. By offering low prices the market warns them 
to stop producing those goods and to withdraw part of the 
labor and the capital that would otherwise have been in- 

No economist invented this method of regulating what man 
shall produce. 11 The classical economists have merely tried 
to describe it. But it is clear that as men cease to be as self- 
sufficient as Robinson Crusoe, they must have some way of 
knowing what kind of work to specialize on. If they did not 
know, if they chose their specialty at random or merely fol- 
lowed their tastes, they might all choose to be locomotive en- 
gineers only to discover that no one had had the ambition to 
build the locomotives. In specializing they must know what 
others are specializing on in order that their divided labors 
may fit together. It is not enough to know what others would 
like to specialize on. Everyone might still insist on being a 
locomotive engineer. There must be some power which in- 
duces or compels everyone to choose a specialty which fits in 
with the other specialties. The prices offered in the mar- 
ket do just that. They do it roughly and, because most mar- 
Jcets are imperfect, they do it with great friction and human 
suffering. But still they do it with* a kind of large brutal 
effectiveness. To those who choose the right specialty at the 
right time they give large rewards j upon those who do not, 
they inflict failure and destitution. 

It is certain that this method of regulating production is 
economically more efficient than custom and inheritance in a 
small, self-contained community of Jacks-of -all-trades. It has 
resulted in such a substantial improvement of the standard of 

21 Cf. F. A. von Hayek's "The Trend of Economic Thinking," 
nomica, May 19331. 


life, measured in command over material goods, that the mod- 
ern Marxians no longer insist on the original thesis that capi- 
talism causes increasing poverty among the working classes. 
But it is equally certain that the progressive increase of wealth 
leaves behind it a trail of misery and failure and frustrated 
lives which has shocked the conscience of mankind. The sta- 
tistics of improvement are not sufficiently impressive to obscure 
the statistics of waste or to drown out the cries of the victims. 
While it is perfectly true that the market determines how 
labor and capital can be effectively invested to satisfy popular 
demands, the market is, humanly speaking, a ruthless sovereign. 
In practice those who misjudge the market must pay for their 
mistakes with their fortunes and by defeat in their lives. 

These tragic consequences are due to certain facts which 
the classical economists and the naive eulogists of nineteenth- 
century capitalism recognized in theory. But they passed them 
over without appreciating their human significance. Econ- 
omists spoke often about the immobility of labor and capital. 
This colorless term means that all men cannot and will not learn 
new trades and leave their homes and neighborhoods, or even 
change their investments, as rapidly as the market dictates. Men 
are not as adaptable as a fluctuating market demands. They are 
not abstract economic units but creatures of habit with deep at- 
tachments to their own ways of life. Moreover, partly because 
labor and capital are not perfectly mobile, and partly for other 
reasons which we shall presently examine, markets for goods 
and labor are often unreliable indicators of what men who have 
labor or capital to invest ought to specialize on. The market 
to-day cannot prophesy accurately enough for human pur- 
poses just where young men can profitably specialize for the 
next twenty years. Broadly speaking, the market does regu- 
late the allocation of capital and labor with some efficiency. But 
there is a 'very large margin of error, which in human terms 


means personal misery, arising from the fact that the choice 
of careers and the investment of personal savings are long com- 
mitments; whereas the short-term fluctuations of prices are 
often misleading, and yet sufficiently violent to wreck many 
lives before men can readapt themselves. 

It is easy to understand, therefore, why almost all men 
have felt that they must escape the ruthless dictation of the 
open market The collectivist movement in its many mani- 
festations is, I believe, precisely that-*- a rebellion against 
the market economy. It may appear as a demand for protec- 
tion. The word is well chosen. The energy of the tariff 
movement, which has swept all the great nations in the past 
seventy years, comes from the conviction that world-wide 
free trade causes intolerably rapid and violent dislocation of 
the established interests of capital and labor. The search for 
protection against the open market leads to tariffs, to laws which 
exclude immigrants, to laws which fix minimum hours and 
wages in certain restricted market areas, to trade-union agree- 
ments, apprenticeship regulations, and licensing provisions for 
particular trades. The desire tor protection may cause a 
demand for the exclusion of foreign capital from -certain in- 
dustries and from colonial territories. It may appear also 
as an attempt to control investment through bankers who keep 
new capital from competing too readily with vested capital. 
It may take the form of all manner of pools, trusts, combina- 
tions in restraint of trade, patent monopolies, and other devices 
for protecting those who are in an industry against competitive 
rivalry among themselves and against new enterprises. 

But in many different ways men seek also to become the 
masters of the market. And here their motives are usually 
so mixed that no one can say where the desire to protect vested 
interests ends and where the desire to exploit and profiteer 
begins. Side by side and entangled with the protectionist 


movement, there is a movement of aggression. It too employe 
collectivist methods. The aggression may be effected by in- 
dustrial monopoly which withholds goods until they fetch a 
higher price than a free market would offer; so manufacturers 
organize restraint of trade and labor unions impose the closed 
union in the closed shop. The objective of the aggression is 
to obtain more than the market price, by controlling the supply 
of goods, by concerted restriction of production, by preempting 
scarce and necessary raw materials, by exploiting exclusive fran- 
chises, by holding patents, or by sheer aggregation of economic 
power through interlocking corporations or tacit agreements 
dictated by community of financial and personal interest. 

Such measures of protection and aggression are those which, 
in a previous chapter, I have called gradual collectivism. Their 
common characteristic is the refusal of those who participate 
in them to let the division of labor be regulated by a free 
market. Their grand and total effect is to make the whole 
economy less and less adaptable, less and less productive, and 
to subject the social order to the increasingly violent conflicts 
of the pressure groups. In the richer countries, where the 
market is wide and the economy productive, the conflicts are 
compromised. In others they cannot be compromised and 
gradual collectivism becomes total collectivism. Men begin 
by seeking protection from or mastery of the market. They 
end by rejecting the whole conception of an economy in which 
the division of labor is regulated in markets. Instead they 
adopt the conception of regulation by intelligent authority. 

5. The Basic Difference between Liberalism and Collectivism 

We are now in a position to see that collectivism and liber- 
alism are different ways of answering the paramount technical 
and human questions which have been posed by the division 


of labor. Abstractly the question is how the allocation of capi- 
tal and labor shall be determined. In human and concrete 
terms it is the question of where savings shall be invested and 
at what jobs men shall work and what goods they shall be 
able to consume. Here, obviously, is the greatest of all social 
questions, for in determining what goods shall be produced, 
at what places, of what quality and quantities, the whole worldly 
existence of men and of their communities is decided. To 
regulate the division of labor is to determine whether men 
shall work on farms or in factories, whether particular regions 
shall be agricultural or industrial, what opportunities shall be 
offered to individuals, what standard of life they may expect. 

The collectivist method is to have these questions answered 
by a planning board and to have its decisions enforced by the 
coercive authority of the state. Under gradual collectivism, 
the authority of the state or the private power of vested in- 
terests is used to resist or to dominate the decisions of the mar- 
ket. Though the market is not abolished, it is not allowed 
to function wherever there is an organized interest strong 
enough to interfere with it. In any complete collectivism 
in war time everywhere and in peaceful periods in the 
totalitarian states the market as the regulator of the division 
of labor is abolished and supplanted by government bureaus. 
Officials then direct production by conscripting labor and sav- 
ings and by rationing goods for consumption. 

The first principle of liberalism, on the contrary, is that 
the market must be preserved and .perfected as the prime regu- 
lator of the division of labor. It was the historic mission 
of liberalism to discover the significance of the division of 
labor; its uncompleted task is to show how law and public 
policy may best be adapted to this mode of production which 
specializes men's work, and thereby establishes an increasingly 
elaborate interdependence among individuals and their com- 


munities throughout the world. The liberal philosophy is 
based on the conviction that, except in emergencies and for 
military purposes, the division of labor cannot be regulated 
successfully by coercive authority, whether it be public or 
private^ that the mode of production which mankind generally 
began to adopt about a hundred and fifty years ago is in its 
essence a market economy, and that, therefore, the true line of 
progress is not to impair or to abolish the market, but to main- 
tain and improve it. 

The liberal conviction that there can be no other satis- 
factory regulator of work, investment, and consumption rests 
on the realization that when men specialize their labor, they 
must live by exchanging the product. If they are to ex- 
change their own product for another product that they need, 
they must make a product .that some other specialist needs. 
So there must be a place where the things they can and are 
willing to make are matched with the things that other men 
need or would like to have. That place is the market place. 
When the collectivist abolishes the market place, all he really 
does is to locate it in the brains of his planning board. Some- 
how or other these officials are supposed to know, by investiga- 
tion and calculation, what everyone can do and how willing 
he is to do it and how well he is able to do it and, also, what 
everyone needs and how he will prefer to satisfy his needs. 
From the liberal point of view it is naive to suppose that any body 
of officials could perform that function in time of peace and 
in an economy of abundance and for the whole wide world. 

If a planning board announced that, henceforth, machines 
in factories would be run not by electrical power generated in 
dynamos but by decrees issued by public officials, it would 
sound absurd. Yet the pretension to regulate the division of 
labor by abolishing the market and substituting authoritative 
planners is an idea of the same order. For what placed those 


dynamos in those particular factories and dedicated that much 
capital and labor to that particular kind of production was a 
calculation based on data furnished by the markets. Only 
when a nation is devoting all its energies to some specific task 
like mobilizing for war or satisfying elementary human needs 
in -time of dire emergency is there any way of directing produc- 
tion without the regulatory guidance of the market. So the 
market is as integral a part of the system of production as the 
machinery, the labor, and the materials. There is no other 
conceivable way in which the infinitely varied ambitions and 
capacities of men can be matched with their infinitely varied 
needs and tastes. The totalitarian state merely suppresses 
this infinite variety of capacity and chpice by the rationing of 
standardized goods and the conscription of standardized labor. 
The market is not something invented by businessmen and 
speculators for their profit, or by the classical economists for 
their intellectual pleasure. The market is the only possible 
method by which labor that has been analyzed into separate 
specialties can be synthesized into useful work. The wheat 
farmer would die for want of a crust of bread, the cotton 
planter would go naked, the carpenter would have to live 
in a cave, if markets did not bring together wheat farmers, 
millers, and bakers, cotton planters, spinners, weavers, and 
clothiers, lumbermen and carpenters. This bringing together 
at the right time, in the right quantities, in accordance with 
the ability to produce and the desire to consume, cannot be or- 
ganized and administered from above by any human power. 
It is an organic, not a fabricated, synthesis which can be ef- 
fected only by the continual matching of bids and offers. For 
the division of labor and its regulation in markets are two 
inseparable aspects of the same process of producing wealth, 
and the failure to understand that truth is a sure sign of a 
failure to understand the technical principle of production in 
the modern world. 


6. Adam Smith and Karl Marx 

Adam Smith discerned the basic truth that the new indus- 
trial technic consists in the division of labor regulated in mar- 
kets* For that reason, though he was an incomplete and limited 
prophet, he Was a true one. He saw that the increasing division 
of labor was the essential revolution in modern times, a revolu- 
tion comparable in its profundity and pervasiveness with the 
change from the pastoral pursuits of nomadic tribes to the til- 
lage of settled agriculturists. Karl Marx, on the other hand, 
seems never to have grasped the inner principle of the indus- 
trial revolution which he sought to interpret. He did not 
understand that because the radical novelty of the new system 
of production is technical and economic, the exchange economy 
of the division of labor is a more fundamental and enduring 
phenomenon than the laws of property or the political institu- 
tions which existed in the nineteenth century. He fixed his 
attention on the title deeds to property rather than upon the 
inherent necessities of the economy itself. So he did not dis- 
tinguish between the technic of the new economy and the laws 
under which it happened to be operating when he wrote. This 
confusion made him a false prophet. For, in his failure to see 
that the new mode of production depends upon the division of 
labor through markets, he evolved a doctrine which, instead 
of re-forming the social order to adapt it to the new mode of 
production, strikes at the vital technic of the economy itself. 
It was as if he had lived during the early days of settled agri- 
culture in a community where the customs of pastoral nomads 
still persisted; and had then, with a feeling of righteous in- 
dignation against the resulting abuses, preached a crusade 
which made settled agriculture impossible. In an analogous 
sense, the Marxian conclusion that the elaborate division of 
labor throughout the world should be planned and administered 
by all-powerful officials is incompatible with the division of 


labor. It invokes a reactionary political method to deal with 
the problems of a progressive economy. 

Because he did not understand the economic revolution 
amidst which he lived, Marx was quite unable to describe the 
principles of the new socialist order. He even made a virtue 
of his failure by deriding as "Utopian" and "unscientific" the 
attempt to discover the principles of socialism. The Marxian 
doctrine is totally devoid of the principles of socialism, and its 
only practical effect is as an incitement of the proletariat to 
seize the coercive authority of the state. 

Thus the Marxian doctrine has proved to be quite use- 
less to socialists once the coup d'etat has been achieved. For 
there is nothing in it, as Lenin and Stalin soon discovered, which 
defines how the economy shall be organized and administered. 
What happened in Russia up to 1917 was perhaps inspired and 
even directed by the Marxian dogma. But what has hap- 
pened since, the whole gigantic effort to make the Russian 
economy a going concern, has had either to be improvised 
ad hoc without benefit of Marx, or imitated from German and 
American industrialism. For Marx was no student of the 
economy brought into being by the industrial revolution, and 
because he never discerned its principles he could not give his 
followers the postulates tif policy by which they could operate 
this economy once they had the political power to control it. 

He misled them completely by teaching them to think that 
the division of labor could be regulated without markets, by the 
overhead administration of all-powerful officials. So thor- 
oughly miseducated was Lenin, for example, when he first 
seized power in Russia, that he thought the administration of 
a socialist economy was no more than "keeping the records of 
labor and products," a matter which could be done easily enough 
"by the whole people." M 

M Cf. Clu V, Sec. 6. 


But a little experience soon taught Lenin that it was not so 
simple as that Experience did not, however, teach him the 
principles of a socialist order. For, as we have seen, such 
principles do not exist and are in the nature of things undis- 
covcrable. 18 What saved Lenin from meeting the real issue, 
and made it possible for the communist dictatorship to make the 
experiment of a planned economy administered by overhead 
authority, was, first, the civil war and the foreign interven- 
tion, which required general military mobilization} second, the 
famine and the dire scarcity of ati goods which required im- 
mediate production of necessities for use without raising too 
many difficult questions about what to produce; and, finally, 
the grand mobilization under the Five- Year Plan by which 
Russia was to be made a self-contained military power prepared 
for war on two fronts. 

All this has had nothing whatever to do with the Marxian doc- 
trine, and so the Russian "experiment" is not a demonstration of 
how a socialist order could be administered. To be sure, it is a 
planned economy authoritatively administered and it has abol- 
ished the. market as the regulator of production. But the 
Russians have been able to regulate production without markets 
only because production has been regulated for them by famine 
and by military necessity. And it may be predicted confidently 
that if ever the time comes when Russia no longer feels the 
need of mobilization, it will become necessary to liquidate the 
planning authority and to return somehow to a market econ- 
omy. 14 

On the other hand, with the rise to power of men who 

11 Cf. Chi. V and VI. 

14 This is true of all the totalitarian regimes. They are unmanageable 
except under conditions approximating those of war, and for that reason 
the reciprocal antagonism of fascist and communist dictators is necessary to the 
perpetuation of both of them. So, for their own salvation, they may be 
counted on to threaten each other. 


followed Adam Smith, his doctrines suffered no such sud- 
den obsolescence. For more than a century his principles 
have been a guide to policy among flourishing nations. To 
say tins is not to suggest that Adam Smith revealed the 
whole truth once and for all, and that his writings are like the 
Koran or the fundamentalist Bible or the Marxian canon as 
viewed by naive Marxists. There have been many, to be sure, 
who thought so, and an Adam Smith fundamentalism has been 
the source of much confusion among capitalists, jurists, and 
social thinkers during the nineteenth century. But Adam 
Smith's basic insight into the division of labor was a genuine 
and a momentous scientific generalization which cannot be 
obsolete until some radically new mode of production comes 
into being. For that reason, though Adam Smith's teachings 
have needed to be refined and supplemented, though his obiter 
dicta are often obsolete, his central ideas are alive. Whatever 
is added or taken away is still consistent with his deepest in- 
sight. The authentic progressive thought of the modern world 
is an evolution from his* discovery that the wealth of nations 
proceeds from the division of labor in widening, and, therefore, 
freer, markets. 

Thus the fundamental difference between Karl Marx and 
Adam Smith, between collectivism and liberalism, is not in their 
social sympathies, nor in their attachment to or rebellion against 
the existing social order, but in their science. Liberalism is the 
line of policy which seeks to re-form the social order to meet the 
needs and fulfill the promise of a mode of production based on 
the division of labor; collectivism is the line of policy which 
promises to retain the material advantages of the new economy, 
yet would abolish the inner regulative principle, namely, the 
widening and freer market, by which the division of labor be- 
comes effective. 

And so, though Marx as an historian saw truly enough that 


production, and with production the exchange of its products, 
is the basis of every social order," 10 he never did realize 
clearly what the modern mode of production is. He became 
confused by failing to distinguish between the injustices and 
miseries of laissez-faire capitalism set in its Victorian context 
of feudal landlordism, on the one hand, and, on the other, the 
new mode of producing wealth which must henceforth prevail 
in any modern society. And so, while his indignation was 
righteous, because his science was wrong he enlisted the pro* 
gressive sympathies of the western world in a reactionary 

7. Latter-Day Liberals 

Karl Marx was not the only thinker of the nineteenth century 
who failed to make this distinction. Marx merely accepted 
uncritically the prevailing assumptions of his time and he must 
be absolved of any unique responsibility. For his error w^s 
shared by almost all the influential, latter-day liberals. They, 
too, identified the existing laws of property with the new mode 
of production. Indeed, his teachings would not have found 
such wide acceptance in the learned world, or have proved so 
hard to refute, had not liberal thinkers and capitalist leaders 
made the same assumption as Marx that the status quo was 
a liberal society completely achieved. By this general failure 
to recognize the economy as a mode of production distinguished 
from the prevailing social order as a complex of laws and insti- 
tutions, the essential issue between collectivism and liberalism 
was obscured. Since the Marxians and latter-day liberals had 
the same premise, that the social order of the nineteenth century 
was the necessary, the appropriate, and a completed reflection of 
this new mode of production, their quarrel was merely whether 
the order was good or bad. 

* " Cf . discussion in Engels, of. cit. y p. 294. 


In this argument the latter-day liberals " were bound to lose. 
For (by any criterion of conscience) the status quo was far from 
good. Moreover, there was not, if I may put it in this fashion, 
any particular status quo for any appreciable period of time. 
The new economy is dynamically progressive; the social order 
was relatively static. As a consequence, the apologists and 
eulogists of the status quo soon found themselves defending 
positions which had in fact been abandoned by events, and 
latter-day liberals like Herbert Spencer " became the apologists 
for miseries and injustices that were intolerable to the con- 
science, and the rationalizers of institutions and practices that 
were absurdly antiquated to the critical intelligence. Their 
position became utterly untenable and their teaching entirely 

** By the term "latter-day liberals" I refer to the representative liberal! 
of the second half of the nineteenth century, of whom Herbert Spencer may 
be regarded as the most uncompromising. Since 1870 the United States 
Supreme Court has been a rather consistent exponent of latter-day liber- 

1T Spencer, for example, persuades himself that for the state to license 
physicians, and forbid unlicensed quacks from prescribing medicine, "is 
directly to violate the moral law ... the invalid is at liberty to buy medi- 
cine from whomsoever he pleases; the unlicensed practitioner is at liberty to 
sell to whomsoever will buy." This was written in 1S48. Cf. chapter on 
"Sanitary Supervision" in Social Stories. 


1. An Inquiry to Be Undertaken 

A HUNDRED years after Adam Smith published The Wealth of 
Nations the liberal philosophy was decadent. It had ceased 
to guide the progressives who sought to improve the social 
order. It had become a collection of querulous shibboleths in- 
voked by property owners when they resisted encroachments 
on their vested interests. 

It is now the fashion to explain this debacle by saying that 
the liberal philosophy was originally no more than the rational- 
ization of the manufacturers and merchants in their strUggle 
against the feudal landlords and the established churches, and 
that once the businessmen were masters of the situation their 
zeal to reform became the zeal to conserve. 

But this explanation does not satisfy me because it fails to 
explain the fact that for more than sixty years the learned men 
in the capitalistic nations have been increasingly vehement 
critics of the existing order. It is not true that they have been 
the defenders of established property using their learning to 
glorify the dominant businessmen. Complacent apology has 
not been the prevailing tone of academic teaching in the leading 
universities of pre-war Germany, or of England and America 
in the past two or three generations. At the present time it is 
certainly not the prevailing tone in the social sciences, as taught 
by scholars or popularized by intellectuals, in any country where 
thought is free. For more than fifty years the influential 


thinkers of the western world have been deeply critical of the 
existing social order* 

The real question is why they turned away from liberalism 
and embraced collectivism as a method of ordering affairs and 
of realizing men's hopes. Had they become conservatives, it 
might be argued that they had been forced to serve the dominant 
businessmen. But what they actually did was to abandon the 
dbris of liberalism to the vested interests, and then they at- 
tacked those vested interests with a body of learning constructed 
on socialist premises. 

This would appear to indicate that at some point in its de- 
velopment the liberal philosophy became scientifically un- 
tenable, and that, thereafter, it ceased to command the intel- 
lectual respect or to satisfy the moral conscience of the leaders 
of thought. 

What happened? Why did it happen? And what shall be 
done about it? On this voyage of discovery I venture now 
to ask the reader to embark. 

2. The Fallacy of Laissez-Faire 

We may well begin, I think, by exploring what may be 
called the cardinal fallacies of nineteenth-century liberalism. 
We come at once upon a most extraordinary confusion in the 
whole field of relations between the law and the state and the 
institution of property on the one hand, and human activities 
on the other. This confusion is entitled the doctrine of laissez- 

No one seems to know who first invented this doctrine or 
gave it its title. It is said * that the idea can be tracecTback to 

1 Cf. "Lainez Faire," by G. D. H. Cole, in Encycloftdio of th* Social &i- 
, Vol. IX, pp. 15-16. 


Italian economists of the seventeenth century, but that the 
phrase "laissez faire, laissez passer" was first used by a French 
merchant of the eighteenth century, named Gournay, who was 
pleading for relief from the intricate local customs tariffs, guild 
restrictions, and other interferences with the freedom of pro- 
duction and trade that had grown so elaborate since the Middle 
Ages. But whatever its historical origin, it is dear that the 
purpose of the maxim was to break down the restrictions of 
more or less self-contained communities which practised a low 
degree of division of labor. 

In the beginning laissez-faire was, therefore, a revolutionary 
political idea. It was propounded when men found it necessary 
to destroy the entrenched resistance of the vested interests which 
opposed the industrial revolution. It was a theory formulated 
for the purpose of destroying laws, institutions, and customs 
that had to be destroyed if the new mode of production was to 
prevail. Laissez-faire was the necessary destructive doctrine 
of a revolutionary movement. That was all it was. It was, 
therefore, incapable of guiding the public policy of states once 
the old order had been overthrown. 

For when the old restrictions of law and custom had been re- 
moved, a process which was substantially accomplished in 
western Europe and America between 1776 and 1832, the real 
question was this: what laws were to govern the new economy? 
At this point, as so often happens among old and triumphant 
revolutionists, the dynamic ideas which had brought the lib- 
erals to power were transformed into an obscurantist and 
pedantic dogma. 

The liberals turned to writing metaphysical treatises on the 
assumption that laissez-faire is a principle of public policy. 
They sought to determine by abstruse and a priori reasoning 
what realms of human activity should and what realms should 


not be regulated by law. 1 John Stuart Mill, for example, 
after examining the pros and cons, arrives at the conclusion that 
"laisser-faire, in short, should be the general practice: every 
departure from it, unless required by some great good, is a 
certain evil." But since he had no criterion by which to 
measure the greatness of a great good, the best he could do was 
to give his personal opinion as to what exceptions to laissez- 
faire were justifiable. They happened to be much more numer- 
ous exceptions than Herbert Spencer thought justifiable. But 
that was not because either Mill or Spencer had clear principles 
to guide him; it was because Mill was a sensitive man in touch 
with practical affairs, whereas Spencer was a secluded doc- 

The whole effort to treat laissez-faire as a principle of public 
policy, and then to determine what should be governed by law 
and what should not be, was based on so obvious an error that 
it seems grotesque. The error was in thinking that any aspect 
of work or of property is ever unregulated by law. The notion 
that there are two fields of social activity, one of anarchy and 
one of law, is false. Yet that is what Mill and Spencer as- 
sumed when they sought to define the proper jurisdiction of 
the law. I suppose that a solitary man cast ashore on an un- 
discovered island could be said to have freedom without 
law. But in a community there is no such thing: all freedom, 
all rights, all property, are sustained by some kind of law. So 
the question can never arise whether there should be law here 
and no law there, but only what law shall prevail everywhere. 
The latter-day liberals who made a political dogma out of 
laissez-faire had merely elevated the historical objection to 

'Cf., c.g., John Stuart Mill's Princifles of Political Economy, Vol. II, 
Bk. V, Ch. XI: "Of the Grounds and Limits of the Laisser-faire or Non- 
interference Principle," p. 569, Mill speaks of 'laiaser-faire" rather than of 


antiquated laws into the delusion that no new laws would or 
should replace them. 

, But new laws did replace them. For in a society there can- 
not for long be such a thing as a legal vacuum. There may of 
course be a period of disorder when the law governing rights 
and duties is unsettled or unenf orced, and in such periods force, 
fraud, and chicanery are rife. But some system of law must 
eventually crystallize as the turbulence of anarchy subsides. 
A system of capitalist law crystallized in the nineteenth century. 
In the English-speaking countries it was the common law 
modified by judicial decision and legislation. While the latter- 
day liberals were gravely considering what the jurisdiction of 
the law ought to be, the jurisdiction was at all times universal 
throughout the economic order. 

By virtue of that jurisdiction there was property, there were 
corporations, there were contracts, there were rights, duties, and 
immunities, there was money with which to exchange goods 
and services, there were standards of weights and measures. 
While the theorists were talking about laissez-faire, men were 
buying and selling legal titles tc property, were chartering 
corporations, were making and enforcing contracts, were suing 
for damages. In these transactions,, by means of which the 
work of society was carried on, the state was implicated at every 
vital point. All these transactions depended upon some kind 
of law, upon the willingness of the state to enforce certain rights 
and to protect certain immunities. And therefore it was wholly 
unreal to ask what were the limits of the jurisdiction of the 

It is most important to fix this clearly in our minds, for then 
we shall be spared much confusion. Let us examine an ex* 
treme case: in 1848 Herbert Spencer argued against Boards x>f 
Health. 8 It is "within the proper sphere of government," he 

*So<M Statics, p. 406 (1866 ed.). 


says, "to repress nuisances." So if a man "contaminates the 
atmosphere breathed by his neighbor," he is "infringing his 
neighbor's rights" and the government may be called upon to 
deal with him as a trespasser. But for the state to "interpose 
between quacks and those who patronize them" is, said Spencer, 
"directly to violate the moral law." Thus he was arguing that 
if I annoy my neighbor by blowing smoke into his house, I may 
be punished, but if I kill him by deceiving him into thinking 
that I am a physician, I go scot-free, and my victim's widow 
is forbidden to shoot me. Spencer thought he was distinguish- 
ing between two realms, one where the state intervenes and 
one where it does not. But actually the state intervenes in both 
instances. The only difference is that in the case of the tres- 
passer Spencer would have the law protect the victim, in the 
case of the quack he would have the law protect the aggressor. 
Let us consider next an example of how the law may change 
by altering the balance of rights and duties. Under the old 
common law of England a workman who was injured could 
sue the master for damages. If he had been injured by a fellow 
workman's negligence, he could still sue the master because the 
law held the master liable for his servant's acts. Under this 
system of law the state was ready to intervene on behalf of an 
injured workman and recover damages for him from his em- 
ployer. In 1 837 this system of law was changed in a decision * 
rendered by Lord Abinger. After that, it became the law that 
the master was not liable for an injury to a workingman when 
the injury was due to the negligence of his fellow workingman. 
So after 1837 the state would not help the injured worker to 
recover damages from the employer. This was pleasant for 
the employer. But for the employee it was not so pleasant. 

'Prisstly v. Fowl* (3 M. & W. 1). Cf. Encyclopedia of the Social 
Sciences, article on* "Employers' Liability/' by Edward Berman. Vol. V, 
p. SIS. 


He could now sue only his fellow servant and might expect to 
get nothing. Years later new kws were enacted designed to 
increase the employer's liability and improve the rights of the 
injured employee. These kws worked badly, and finally 
workmen's compensation kws were enacted based on the princi- 
ple that an injured workman should not have to sue, but should 
receive damages according to a definite schedule j the costs 
were to be covered by compulsory insurance which was carried 
by the employers. Now surely it would be misleading to 
interpret these oscillations of the employer's liability and the 
worker's rights as instances where the state interfered or prac- 
tised laissez-faire. Before Lord Abinger's ruling the worker 
had a right which he no longer had after the ruling. The em- 
ployer had a new immunity. When the compensation kws 
were enacted, the employer had a new obligation and the em- 
ployee a new right. 

All of this is by way of illustrating the point that the latter- 
day liberals were deeply confused when they set out to define 
the limits of the jurisdiction of the state. The whole regime 
of private property and contract, the whole system of enterprise 
by individuals, partners, and corporations, exists in a legal con- 
tract, and is inconceivable apart from that context. 

Just how the latter-day liberals came to overlook something 
so obvious as that is rather obscure. But apparently they had 
some sort of notion that because the existing law of property 
and contracts had not been formally enacted by a legislature, 
but had evolved by usage and judicial decision under the com- 
mon law, it was somehow a natural law originating in the nature 
of things and valid in a superhuman sense. They came to 
think of these traditional kws of property and contract as 
prevailing in a realm of freedom, and when statutes they did 
not like were enacted to amend the traditional law, they thought 
of them as interferences by the state. 


But, of course, the old unamended traditional law depended 
upon the implied willingness of the state to intervene: the 
rights which existed under that law could enlist the services of 
the policeman, the jailer, and the hangman. Without the 
implied willingness of the state to intervene with all its power, 
the rugged individualist who preached laissez-faire would have 
been utterly helpless. He could not have obtained or given 
valid title to any property. He could not have made a con- 
tract, however free. He could never have organized a corpora- 
tion with limited liability and perpetual succession. The rug- 
ged individualist may have imagined that in his economic life 
he was the person that God and his own will had made. But in 
fact he was a juristic creature of the law that happened to pre- 
vail in his epoch. For, as Ernest Barker has said: "It is not the 
natural Ego which enters a court of law. It is a right-and- 
duty-bearing person, created by the law, which appears before 
the law." 6 

Were there any question about the thesis that capitalism de- 
veloped in a context of historic law and not in the free realm 
of Nowhere, the conclusive evidence would be found in the 
fact that the substance of law has been continually modified. 
What is it that courts and legislatures have been doing these 
hundred and fifty years if not defining, redefining, amending, 
and supplementing the laws of property, contract, and corpora- 
tions, and of human relations? They have done other things, 
too, such as to raise armies, provide social services, and dis- 
tribute benefits and privileges. But at the same time they have 
never been letting alone, on the theory that they are not within 
the jurisdiction of the state, the rights and duties which are the 
legal foundation of the'division of labor. And in the course of 
their lawmaking and adjudicating, they have been adding to and 

From the Translator's Introduction to Otto Gierke's Natural Late and 
the Theory of Socitty. Vol. I, p. Izzi. 


taking away from the ever-changing rights and duties which 
are the substance of property and of contract and of corpora- 

The preoccupation of the latter-day liberals with the problem 
of laissez-faire is a case of the frustration of science by a false 
problem. It is not an uncommon occurrence. It is some- 
thing like the persistent effort of astronomers to explain the 
motions of the solar system by treating the earth as the fixed 
centre of itj the progress of astronomical science was arrested 
until it had been observed that the earth was not the fixed centre 
of the solar system. Now the progress of liberalism was, I am 
convinced, halted by the wholly false assumption that there 
was a realm of freedom in which the exchange economy oper- 
ated and, apart from it, a realm of law where the state had 

The consequences of the error were catastrophic. For in 
setting up this hypothetical and nonexistent realm of freedom 
where men worked, bought and sold goods, made contracts and 
owned property, the liberals became the uncritical defenders 
of the law which happened actually to prevail in that realm, 
and so the helpless apologists for all the abuses and miseries 
which accompanied it. Having assumed that there was no 
law there, but that it was a natural God-given order, they could 
only teach joyous acceptance or stoic resignation. Actually 
they were defending a system of law compounded from juristic 
remnants of the past and self-regarding innovations introduced 
by the successful and the powerful classes in society. 

Moreover, having assumed away the existence of a system 
of man-made law governing the rights of property, contract, 
and corporation, they could not, of course, interest themselves 
in the question of whether this law was a good law, or of how 
it could be reformed or improved. The derision poured out 
upon the latter-day liberals as men who had become complacent 


is not unjustified. Though they were probably not more in- 
sensitive than other men, their minds stopped working. Their 
unanalyzed assumption that the exchange economy was "free," 
in the sense that it was outside the jurisdiction of the state, 
brought them up against a blank wall. It became impossible 
for the latter-day liberals to ask the question, much less to 
find the answer, whether the existing law was good and how it 
could be reformed. That is why they lost the intellectual 
leadership of the progressive nations, and why the progressive 
movement turned its back on liberalism. 

3. The Enchanting Promise 

But though the development of liberal ideas was halted, it 
was halted, so to speak, on the main road of human progress. 
The liberals had come upon the fundamental clue t6 the only 
kind of social order which can in fact be progressive in this 
epoch. They had discerned the true principle of the mode of 
production which the industrial revolution was introducing. 
They had understood that in the new economy wealth is aug- 
mented by the division of labor in widening markets j and that 
this division of labor transforms more or less self-sufficient 
men and relatively autonomous communities into a Great So- 
ciety. 6 

It was no accident that the century which followed the in- 
tensified application of the principle of the division of labor was 
the great century of human emancipation. In that period 
chattel slavery and serfdom, the subjection of women, the 
patriarchal domination of children, caste and legalized class 
privileges, the exploitation of backward peoples, autocracy in 

*Cf. Graham Wallas, of, tit. My own Public Opinion is a study of 
democracy in the Great Society; A Preface to Morals is a study of certain 
moral and religious consequences of this social transformation. 


government, the enfranchisement of the masses and their 
compulsory illiteracy, official intolerance and legalized bigotry, 
were outlawed in the human conscience) and in a very substan- 
tial degree they were abolished in fact. During this same 
period petty principalities coalesced voluntarily into larger 
national unions, at peace within their borders; in this period, 
too, the interdependence of the peoples became so evident a 
fact that the older empires went through a spectacular trans* 
formation into federations of self-governing states, and among 
all civilized nations peace became the avowed aim, even if it 
was not always the real aim, of foreign policy. 

All of this did not happen by some sort of spontaneous 
enlightenment and upsurge of good will. The characters of 
men were not suddenly altered. We can be certain of that, 
now that we live in an epoch of reaction where obscurantism 
is again an official policy in several nations and there is so much 
bad will in all the nations. What did change in the nineteenth 
century was the condition in which men lived, and the liberal 
enlightenment reflected it. The new mode of production, since 
it was based on the profitable exchange of specialized labor, 
envisaged a social order based on the harmony of interest among 
widely separated but collaborating men and communities. We 
have become insensitive and forgetful about the revolutionary 
change in human life. But to our great-grandfathers it was 
an intoxicating promise that had suddenly been revealed to 
mankind, and only by recapturing the original insight of the 
pioneer liberals can we fully appreciate the evangelical fervor 
with which they preached that the freedom of trade was a new 
dispensation for all mankind. 

For the first time in human history men had come upon a 
way of producing wealth in which the good fortune of others 
multiplied their own. It was a great moment, for example, in 
the long history of conquest, rapine, and oppression when David 


Hume could say (1742) at the conclusion of his essay, "Of 
the "Jealousy of Trade": "I shall therefore venture to ac- 
knowledge, that, not only as a man, but as a British subject, 
I pray for the flourishing commerce of Germany, Spain, Italy, 
and even France itself. I am at least certain that Great Britain, 
and all those nations, would flourish more, did their sovereigns 
and ministers adopt such enlarged and benevolent sympathies 
toward each other." T It had not occurred to many men before 
that the Golden Rule was economically sound. Thus the en- 
larged and benevolent sympathies of the eighteenth and nine- 
teenth centuries had a material foundation in the self-interest 
of men who were growing richer by exchanging the products 
of specialized labor in wide markets. 

They actually felt it to be true that an enlightened self- 
interest promoted the common good. For the first time men 
could conceive a social order in which the ancient moral as- 
piration for liberty, equality, and fraternity was consistent with 
the abolition of poverty and the increase of wealth. Until the 
division of labor had begun to make men dependent upon the 
free collaboration of other men, the worldly policy was to be 
predatory. The claims of the spirit were other-worldly. So 
it was not until the industrial revolution had altered the tra- 
ditional mode of life that the vista was opened at the end of 
which men could see the possibility of the Good Society on this 
earth. At long last the ancient schism between the world and 
the spirit, between self-interest and disinterestedness, was 
potentially closed, and a wholly new orientation of the human 
race became theoretically conceivable and, in fact, necessary. 

It is the unfinished mission of liberalism to discover the 
guiding principles by which this revolutionary readaptation of 
mankind can proceed. 

T David Hume, Essays Moral, Political, and Literary. Vol. I, Part II, No. 


4. The Dismal Science 

Having seen the vision of the Promised Land, the nineteenth- 
century liberals began to feel that they had reached it. After 
ally they saw astounding progress in almost every field of hu- 
man activity, not merely in the general standard of life but in 
a succession of scientific discoveries and inventions and in an 
elevation of man's sense of decency. That the nineteenth 
century was one of the very great creative periods in all history 
is not easily evident to us who take these achievements for 
granted. But it was evident to our great-grandfathers, who 
remembered what had gone before. So in justice to the older 
liberals we must remember, when their dithyrambs sound 
unduly complacent to our ears, that their eyes were fixed 
on the achievements of their epoch, whereas ours are fixed 
on the grave problems they neglected and left for us to 

Not only did their social science fail them as a guide to public 
policy because of their preoccupation with the false problem of 
laissez-faire j but they fell into a complementary fallacy which 
was equally destructive to the development of liberal science. 
Just as they had assumed that the economy of divided labor 
operates by natural laws outside the context of a legal system, so 
they also assumed that these natural laws were the laws formu- 
lated in their economic science. This is the fallacy of the 
classical economics which descends from David Ricardo and 
has permeated the outlook of successful businessmen, of con- 
servative statesmen, and so much of the jurisprudence of the 
past seventy years. The fallacy, here, was subtler but none 
the less stultifying than that connected with the dogma of 
laissez-faire. It consisted in the drawing of tremendous prac- 
tical conclusions from the first phase of an incompleted sci- 
entific inquiry. 



The purpose of the inquiry, as Adam Smith defined it in 
1776, 8 was to ascertain the causes of the "improvement in the 
productive powers of labour, and the order, according to which 
its produce is naturally distributed among the different ranks 
and conditions of men. . . ." But in fact it was chiefly upon 
the second )Dart of this programme that the attention of the 
classical economists after Ricardo was centred. Adam Smith, 
who wrote in the early days of the new industrial system, was 
concerned with its promise, and Malthus, who began to specu- 
late during the French Revolution, was concerned with its 
disappointments} but by the time of Ricardo the new economy 
was triumphantly established in England. Ricardo was not 
concerned with the increase of wealth, for wealth was increasing 
and the economists did not need to worry about that. He even 
persuaded himself that to inquire into the causes which increase 
the total quantity of wealth was "vain and delusive." But 
the distribution of wealth was not so readily to be taken for 
granted. That was a problem made manifest by the social dis- 
content in England after the Napoleonic Wars. Ricardo took 
this problem to be the subject matter of political economy, and 
set out to ascertain "the laws which determine the division of 
the produce of industry among the classes who concur in its 
formation.'* 9 

In separating the production of wealth from the distribution 
of wealth, Ricardo thought he was eliminating from economic 
science those things about which "no law can be laid down" and 
was directing it to the field where "a tolerably correct one can 
be laid down respecting proportions." The separation was al- 
most certainly an error. For the amount of wealth which is 

' Of. dt., p. 2. 

9 In a letter to Malthas, Oct. 9, 1820, cited in Keynes, of. cit., p. 4. 
See also Preface to The Principles of Political Economy and Taxation (1821) 
ed.) : "To determine the laws which regulate this distribution is the principal 
problem in Political Economy." 


available for distribution cannot in fact be separated from the 
proportions in which it is distributed. In a poor society the 
proportion of the national income which goes to the owners of 
capital will be relatively larger, though of course absolutely 
smaller, than in a rich society. We can see this illustrated, 
curiously .enough, in Russia to-day, where the rate of interest, 
free of inheritance and income taxes, is between 7 and 8 per 
cent, whereas in America it is between 3 and 5 per cent; 10 more- 
over, in Russia the proportionate income of the poorest-paid 
workers to that of the so-called Stakhanovist workers is as one 
is to twenty, and to the directing specialists it is as much as one 
is to eighty or a hundred. This is a much more unequal dis- 
tribution of incomes paid for producing wealth than is to be 
found in America, 11 and it arises because in a poor society the 
scarcity of capital, of special technical and organizing ability, 
will make the wages of capital and of ability relatively higher 
than in a country where they are more abundant. 

Moreover, the proportion in which wealth is distributed 
must have an effect on the amount produced. Thus an un- 
equal distribution of wealth will have different effects on pro- 
duction depending on whether it is a small amount, a moderate 
amount, or a large amount of wealth which is unequally di- 
vided. In a very poor country, the poor have such a hopelessly 
low standard of life that they cannot buy enough goods to make 
profitable the use of the capital which the rich might invest. 
In such a country, the rich will tend not to save but to live in 
profligate luxury. In a moderately rich community, the rich 

30 Cf . Max Eastman's "The End of Socialism in Russia," Harf^s Maga- 
tin*, Feb. 1937. 

31 1 am talking of interest paid on capital and of wages and salaries, and 
not, of course, of windfall fortunes accumulated from successful speculation 
in land or natural resources, from the monopolistic control of a market, 
whether by a great corporation or a moving-picture star, or even from pio- 
neer enterprises, like Henry Ford's production of a cheap automobile. 


will tend to save and invest capital, and to increase the national 
dividend. In a very rich country where the general standard 
of life is comfortable, the people will tend to prefer more 
leisure to more wealth j the returns on capital will, therefore, 
tend to fall because the supply is greater than the demand, -and 
the rate at which wealth increases will tend to diminish. 

This goes to show that in concentrating on the distribution 
of wealth the position of the classical economists after Ricardo 
was not even theoretically tenable. The initial error led to 
greater errors. In order to analyze the fictitious problem of 
distribution as such they had to construct an hypothetical econ- 
omy. For no laws could be deduced from what William James 
once called the blooming buzzing confusion of the real world. 
The real world was a blooming buzzing confusion to the econ- 
omist because the economy operated in a context of ancient 
habits, prejudice, usage, and law. They had to simplify the 
facts by supposing that all men would and could behave in 
certain definite ways. Thus they assumed that all labor and 
all capital were perfectly mobile, and, therefore, free and able 
to move without friction from one kind of production to another. 
They assumed that each laborer and capitalist knew infallibly 
where to move. That he knew when to* move. That he was 
willing to move. That he had the facilities for moving. That 
he was not held down to a particular job by inveterate habit, 
to a particular place by family ties, by love of his own neighbor- 
hood, by friendships and social connections, by the ownership 
of a home which could not be disposed of without sacrifice. 
They assumed that all men are born free and equal, and have 
equal opportunities to develop and to use their differing native 
gifts. They assumed that workers and managers and 
entrepreneurs are capable of being highly specialized and at 
the same time capable of adopting a different specialty at any 
period in their active careers. They assumed that there were 


no legal privileges, no natural monopolies, no conspiracies in 
restraint of trade, but only perfect and fair competition among 
equally intelligent, equally informed, equally placed and uni- 
versally adaptable men* 

In such a society all values would be "natural" values 
that is to say, the wages of each laborer and superintendent and 
manager would be what he produced, the interest earned by 
each capitalist would be what his abstinence had contributed, 
and the profits of the entrepreneur would always approximate 
zero. In such a society the perfect competition of men with 
absolutely equal opportunities, infallible foresight, complete 
adaptability, and no prejudices about what they wished to do or 
where they wished to live would produce perfect justice. The 
laborer would be worthy of his hire and would always get it. 

This seemed so delightful that the classical economists forgot 
that they had deduced from their hypothesis the conclusions 
which they had put into it. The subtler minds among them 
were, of course, aware that in the real world there were "dis- 
turbances" of one kind or another which they had left out of 
their science. But the general public which read Ricardo, 
the publicists who popularized economics, the businessmen and 
the politicians who read the popularizations, ignored all reserva- 
tions about the "disturbances" and proudly exploited political 
economy as a demonstration that the existing order was the 
perfection of reason and justice. The economists, alas, did not 
protest very loudly when they found themselves promoted to 
the status of oracles. For it was a pleasant role, full of dignity 
and honor, and, moreover, they were profoundly confused. 

For the imaginary system they had constructed was enough 
like the actual system to provide continual and reassuring veri- 
fication for their conclusions. Thus while labor and capital 
were not perfectly mobile in the real world, they were much 
more mobile than they had been in any previous epoch of human 


history. While opportunities were not equal for all men, 
they were much more nearly equal than they had ever been 
before. With the removal of caste privileges, mediaeval and 
mercantilist restrictions, the diminution of class prejudice, op- 
portunity was becoming more nearly equal. While competition 
was not perfect, it was much freer than it had been in former 
days under the chartered monopolies and licensed occupations. 
So the actual world did vaguely tend to approximate their 
imaginary world, and impressive evidence could be found to 
show that society was in fact progressing towards a higher 
standard of life and greater justice and enlightenment. 

The best of the classical economists knew that they had con- 
structed an hypothetical social order. But they did not ap- 
preciate the immense scientific implications or the practical 
consequences of the particular hypothesis they adopted. For 
their science was not the mere creation of a wayward fancy or 
an idle speculation with meaningless abstractions. Ricardo 
was a man of genius, and one of the marks of genius is the ability 
to leap over the apparent facts into hypotheses which open up 
fruitful inquiries. The imaginary social order of the classical 
economists was an act of creative imagination. It described an 
order in which the frictions and abuses of the actual world had 
been removed, in which the facilities, the adaptability, and the 
foresight that are actually lacking had by hypothesis been sup- 
plied. This imaginary order, let us note clearly, was not an 
impossible world such as a poet might construct by assuming 
that all labor was a pleasant exercise and that the necessities of 
life would be miraculously supplied. The imaginary order of 
the economists supposed a real world of the division of labor 
where men have to earn their living by the sweat of their brows. 
It supposed a real world in which men desire their own advan- 
tage. It was not the Garden of Eden before the curse fell upon 
Adam. Yet it was not the world they lived in. It was the 


world they lived in drastically purged and reformed and re- 

So what the political economists had conceived in their science 
was not a picture of the world as it is but a picture of the world 
as it needs to be remade. They had imagined the kind of hu- 
man society in which the social problems arising from the di- 
vision of labor are solved. Thus inadvertently, in the act of 
trying to simplify the facts in order to understand them, they 
had been inspired to discover the criterion by which these social 
problems can be truly defined and the true solutions can be 
indicated. By making certain assumptions they had described 
a just society based on the division of labor; then it followed 
that in the real world of injustice and maladjustment these 
assumptions were the proper objectives of policy. What they 
overlooked was that in order to imagine how the division of 
labor would work with perfect justice, it had been necessary 
to assume a reformed society of reformed individuals. It 
should have followed, then, that, in order to achieve the re- 
sult in practice, it is necessary to make the reforms in practice. 

Instead of the classical economics being an apologetic ex- 
planation of the existing order, it is, when properly understood, 
a searching criticism of that order. It is a theoretical measure 
which reveals how far short of the promise, how unadjusted to 
the needs of the division of the labor, is the actual society in 
which we live. Had the liberal economists realized this impli- 
cation of their own hypothesis, they would have embarked at 
once upon the task of exploring the legal, psychological, and 
social circumstances which obstructed and perverted the actual 
society. They would not have left the criticism and the reform 
of society to those who did not understand, or were determined 
to abolish, the new mode of production. They would have seen 
that the mission of liberalism was to develop the principles by 
which mankind could readapt its habits and institutions to the 


industrial revolution. They would have carried on the tra- 
dition that Adam Smith founded, and, like him, they would 
have been the critics of the status quo and the intellectual 
leaders of its necessary reform. 

They did not do this. The liberal economists from Ricardo 
until recent times were obsessed by the deadly confusion that 
their imaginary world was not a critical introduction to research 
and reform but the delineation of an order to which the real 
world conformed approximately, and sufficiently. This error 
sterilized the scientific advance of liberal thought, paralyzed 
the practical energies of liberal statesmen, and destroyed the 
prestige of liberalism. So the economists were properly re- 
buked by Carlyle, who had his eyes on the real world, as the 
teachers of a Dismal Science. 11 

11 Thomas Carlyle, "The Nigger Querfion." 



/. The Inexorable Law of the Industrial Revolution 

THE debacle of liberalism in the nineteenth century occurred 
when the thinking of liberals was arrested by their misunder- 
standing of laissez-faire and of the classical economics. It is 
a case of a great scientific movement suddenly inhibited by in- 
tellectual error, and it is by no means the first or the only in- 
stance of its kind in history. The progress of ancient science 
appears to have been halted in the fourth century B.C. by an 
analogous deflection of the Hellenic mind from a progressive 
examination of experience to circular, metaphysical speculation. 
Liberal thinking was inhibited in the metaphysics of laissez-faire, 
and the effect was to make the political philosophy of liberalism 
a grand negation, a general non possumus, and a complacent 
defense of the dominant classes: It was inhibited no less com- 
pletely in the circular dialectics of the classical economics. The 
effect here was to shut off the minds of the liberals from the 
study of social readjustment, and to dose their imaginations 
and their sympathies to the crying need for reform. 

There is no reason to suppose that as men they were pe- 
culiarly deficient in sensibility or in the feeling for justice. 
But they had gone up a dogmatic blind alley in which their 
doctrines forbade them to trust their sympathies or to enter- 
tain the notion that man's lot could be improved. And it 
must be admitted that when liberalism had become frozen in 
its own errors, it attracted an undue proportion of mediocre 
place-hunters and time-servers, and repelled the generous, 
the brave, and the discerning. 


To the debacle of liberal science can be traced the moral schism 
of the modern world which so tragically divides enlightened 
men. For the liberals are the inheritors of the science which 
truly interprets the progressive principle of the industrial revo- 
lution. But they have been unable to carry forward their sci- 
ence; they have not wrested from it a social philosophy which 
is humanly satisfactory. The collectivists, on the other hand, 
have the zest for progress, the sympathy for the poor, the 
burning sense of wrong, the impulse for great deeds, which 
have been lacking in latter-day liberalism. But their science 
is founded on a profound misunderstanding of the economy at 
the foundation of modern society, and their actions, therefore, 
are deeply destructive and reactionary. So men's hearts are 
torn, their minds are divided, they are offered impossible choices. 
They are asked to choose between the liberals who came to a 
dead stop but stopped on the right road up to wealth and 
freedom and justice and the collectivists who are in furious 
movement but on a road that leads down to the abyss of 
tyranny, impoverishment, and general war. 

Yet this impossible choice exists only in the minds of men, 
in their doctrines and their prejudices, and not in. the nature of 
things. The impasse in which men find themselves is sub- 
jective. It is the consequence of human error and not of fate. 
There is no reason to think that the time has come when the 
social order cannot adapt itself to the economy brought into 
being by the industrial revolution, and that, therefore, men 
must destroy the new economy. For that would mean that 
the industrial revolution itself had come to a dead end. It 
would mean that the new mode of production which underlies 
all social systems and all institutions and all public policies 
can no longer be tolerated by mankind. It would mean that 
men must dismantle and reverse the industrial revolution it- 
self as the autarchists are doing in Germany and that by 


painful steps they must retrace the path bade to isolated com- 
munities practising a relatively low degree of division of labor* 

That is why such momentous conclusions hang upon the 
question of whether the debacle of liberalism was due to the 
error of the liberals or, as the collectivists believe, to some kind 
of inescapable historic necessity. In raising the question I am 
certainly not concerned to rehabilitate the word "liberalism," 
which is now a battered ornament that evokes the most equivocal 
sentiments. But I am concerned with the substance. And 
that substance, as I see it, is that men cannot undo the conse- 
quences of the industrial revolution, that they are committed 
to the new mode of production, to the division of labor among 
interdependent communities and individuals. This is the truly 
inexorable historic necessity. They can no more reverse the 
industrial revolution by an act of will and by political coercion 
than they could return from manufacture to handicraft, from 
settled agriculture to a pastoral economy. Nor do men wish to 
do this. Nor would they willingly consent. 

And so I insist that collectivism, which replaces the free mar- 
ket by coercive centralized authority, is reactionary in the exact 
sense of the word. Collectivism not only renders impossible 
the progressive division of labor, but requires, wherever it is 
attempted, a regression to a more primitive mode of production. 
We can see this amply demonstrated in the totalitarian states, 
most clearly in Russia, where there have been two attempts to , 
establish socialism, and two retreats, one in 1921 and another 
in 1931, from a planned and directed economy to an economy 
directed by the market. 1 

* z The first retreat was by Lenin in 1921 and was known as the New 
Economic Policy. It was regarded as a temporary repeal of communism. 
The second retreat was by Stalin in 1931 when he reintroduced differential 
wages, the conduct of enterprises for profit, the personal responsibility of 
licensed management, called "socialist ownership," trading in open shops. 
Communism is now outlawed in Russia, its adherents being Known as 


The first of these retreats is usually ascribed by sincere com- 
munists to the practical genius of Lenin, and the second to the 
wicked ambitions of Stalin. But we may be reasonably sure 
that both were dictated by inexorable necessity: Russia, though 
it is primitive, is in the earlier stages of the industrial revolution. 
It is substituting the specialized division of labor for the auton- 
omous village and isolated regional economy, and the new mode 
of production cannot be made to operate, even by omnipotent 
dictators over a docile and terrorized people, without the 
recstablishment of at least relatively free markets. 

Marx, who was very fond of expounding the inexorable laws 
of history, had the misfortune not to discern what law it was 
that was so inexorable, and thus his disciples in Russia and else- 
where, after twenty years of communist supremacy, are murder- 
ing one another in the name of the true faith. The really 
inexorable law of modern society is the law of the industrial 
revolution, that nations must practise the division of labor in 
wide markets or sink into squalor and servitude. Those who 
do not practise this new economy, the so-called backward na- 
tions, will become the prey of those who doj they must enter 
the new economy if they are to survive, and only by practising 
it can they hope to escape conquest or economic and cultural 
absorption. The advanced nations where the new economy is 
established must preserve it. In no other way can they main- 
tain their large populations at the standard of life to which 
they have become habituated. So when advanced nations adopt 
collectivism, and its inevitable corollary, the self-contained 
economy, they are doomed to a descending standard of life and 
driven to unspeakable brutality in order to crush the ensuing 

A free choice between a liberal and a collectivist order does 
not exist in fact. That is to say, it does not exist for ordinary 
men who wish to maintain and to improve their standard of life. 


There is no choice because men are committed to the division 
of labor, and it is as impossible for them tq live by any other 
means as it was for their ancestors in the villages clustered 
around regional market towns to exist without a high degree of 
self-sufficiency. The apparent choice between a liberal and 
a collectivist order exists only in the mind, only until collectivism 
is put fully into practice, only in the realm of hopes and projects 
where men discuss what they think they would like to do. The 
choice does not exist when they come to find out what they can 
do. For there is no way of practising the division of labor, and 
of harvesting the fruits of it, except in a social order which 
preserves and strives to perfect the freedom of the market. 
This is the inexorable law of the industrial revolution, and 
while men may disobey that law, the price of their disobedience 
is the frustration of all their hopes. 

For that reason the debacle of nineteenth-century liberalism 
may confidently be ascribed to intellectual error rather than 
to historical fate. The renascence of liberalism may be re- 
garded as assured. Behind the liberal philosophy is the whole 
force of man's commitment to the economy of the division of 
labor, and that necessity must compel the invention of an ap- 
propriate social order. The name "liberal" may be forgotten, 
those who call themselves liberals may relapse into humiliated 
silence, but still the necessities of the mode of production will 
compel men to rediscover and to reestablish the essential prin- 
ciples of a liberal society. That is the lesson of the Russian ex- 
periment where we see a nation which has no liberaj tradition, 
which has been indoctrinated with contempt for liberalism, and 
is nevertheless compelled by sheer economic necessity to redis- 
cover by trial and error the rudiments of liberalism. 

So we may ascribe the eclipse of liberalism to errors that 
inhibited necessary reforms. The latter-day liberals became 
mired in statu quo by the political dogma of laissez-faire which 


held them to the idea that nothing should be done, by the con- 
. fusion of the classical economics which held them to the idea that 
nothing needed to be done. In the time of Adam Smith and 
Jeremy Bcntham, from, say, 1776 to 1832, liberalism 
was a philosophy which led the way in adapting the social order 
to the needs of the new industrial economy j by the middle of 
the nineteenth century, liberalism had become a philosophy of 
neglect and refusal to proceed with social adaptation. The 
impasse to which liberalism had come may be studied in the 
later teachings of Herbert Spencer and in a line of decisions of 
the United States Supreme Court under the "due process" 
clause. But this need not have happened. The classical eco- 
nomics, properly understood, was not an apologetic description 
of the status quoj it was a normative science which criticized 
the status quo, disclosing the points at which reform was 
necessary, and indicating the kind of reform that was desir- 

Those points were recognized in the classical economics as 
the "frictions" and "disturbances" which caused the real world 
to behave differently from the theoretical system. But though 
the economists recognized the frictions and disturbances, they 
grossly underestimated their human and social significance. 
The choice of such colorless terms as "friction" and "dis- 
turbance" in itself reveals the insensibility of doctrinaire think- 
ing. In the eyes of the victims the frictions and disturbances 
were cruel injustices, misery, defeat, and frustration. It was 
idle to tell the victims that on the whole, in the abstract, and 
in the long run, all was for the best in the best of all possible 
worlds. It was foolish to tell the victims that no relief or 
reform could be given and that none was needed; that the sys- 
tem was just even though it seemed unjust to them. The 
maladjustments, which the economists called frictions and dis- 
turbances, which the victims called injustice and misery, were 
too numerous to be dismissed by the teaching of resignation to 


the masses. They should have beeh the primary concern of 
the liberals, the main subject of their inquiries, the constant care 
of their statesmanship. For the cumulative neglect of the 
abuses vitiated respect for the system. It led to the conviction, 
which has since 1870 taken hold of the working classes and of 
the leading thinkers of all nations, that the existing order 
is radically unjust and intolerable. 

This conviction was humanly creditable. Yet the liberals 
were right in their initial assumption that the abuses were inci- 
dental rather than fundamental. They were right because the 
basic economy of the division of labor regulated in markets is 
a mode of production, like village agriculture or pastoral 
nomadism. Men may like it or dislike it. That is an aesthetic 
preference, such as preferring the life of a hunter or a shepherd 
to that of a farmer or a factory worker. But a mode of pro- 
duction cannot be judged to be fundamentally just or unjust. 
Questions of justice can arise only out of the maladjustment of 
laws, institutions, education, and social custom to a particular 
mode of production. 

Present-day men can reform the social order by changing the 
laws. But by political means they cannot revolutionize the 
mode of production. Until invention, which is as yet not even 
within the speculative possibilities, creates a more efficient and 
radically different method of producing wealth, mankind is 
committed to the division of labor in a market economy. The 
kind of revolution which would make obsolete the market econ- 
omy would be a series of inventions which enabled men by their 
own self-sufficient effort to achieve a more satisfactory standard 
of life than they now aspire to. It might be done by a ma- 
chine that would with a little muscular energy produce food, 
clothes, shelter, comforts, and luxuries out of any soil and a 
little sunshine 5 or it might be done by a medicine which would 
make men cease to want the diversified products of modern 


In the actual world add with the knowledge we now pos- 
sess, it is beyond the power of the Lenins, Stalins, Hitlers, and 
Mussolini's to revolutionize the mode of production; they can 
merely attack it, and impair it. In the end their peoples must 
return to the division of labor in an exchange economy as surely 
as the farmer must return to his land if he would harvest a 
crop. It is the social order that has to be reformed. That 
is the truth which the early liberals grasped when they were 
the persistent critics of the laws, the institutions, and the public 
policy of their day. This truth the latter-day liberals ignored 
when they became complacent and apologetic. This truth the 
collcctivists have missed when, under the impression that they 
are striking at social injustices, they deliver their blow at the 
free market which regulates the division of labor. 

But the truth will prevail. When I say that the renascence 
of liberalism is assured, I do not mean, of course, that it must 
come in our own time, or that it will come before mankind has 
gone through the disaster which the descent into collectivism 
has prepared. I do not know whether the disaster is avoidable 
by intelligence and resolute action. But I do believe that there 
is no escape from the disaster and no way of restoring the civ- 
ilization which it would shatter except by a social philosophy 
which obeys the law of the industrial revolution. Either men 
will find this social philosophy by their intelligence, or they will 
learn it by bitter experience when, as in Russia, they have passed 
through ordeal by fire. But learn it they will. For they must. 
It is the condition of their survival as civilized men. 

2. The Social Problems 

I have suggested that the "frictions" and "disturbances" 
which the classical economists recognized only to neglect 
them were, in fact, the social problems which should have 


been, and in a society practising the division pf labor must 
always be, the paramount concern of enlightened men. For 
the frictions and disturbances mark the points at which the 
social order is in conflict with the economy. They are the 
points where for one reason or another men fail to adapt them- 
selves successfully to the way in which mankind earns its 
living. The causes of the maladaptation are numerous and 
mixed j it is certain that they cannot all be traced, is socialists 
think, to the single fact that the residual legal titles to property 
in the means of production are vested in private persons and 
not in the state. 1 The maladaptation arises from the fact that 
a revolution in the mode of production has occurred. Since it 
is proceeding among men who have inherited a radically differ-t 
ent way of life, the readjustment required must necessarily 
take place throughout the social order. It must almost cer- 
tainly continue as long as the industrial revolution itself con- 
tinues. There can be no moment at which "the new order" is 
in being. A dynamic economy must in the nature of things 
inhabit a progressive social order. 

The real problems of modern societies arise where the social 
order is not consistent with the requirements of the division 
of labor. A survey of all the current problems would be a 
catalogue of these inconsistencies. The catalogue would be- 
gin with the pre-natal endowment of the human stock, would 
traverse all customs, laws, institutions, and policies, and would 
not be complete until it had included man's conception of his 
destiny on earth and his valuation of his soul and of the souls 
of all other men. For where there is conflict between the 
social heritage and the manner in which men must earn their 
living, there will be disorder in their affairs and division in 
their spirits. When the social heritage and the economy do 
not form a seamless web, there must be rebellion against the 

Cf. Ch.V,Sec. 5. 



world or renunciation of the world. That is why in epochs 
like our own, when society is at odds with the conditions of its 
existence, discontent drives some to active violence and some 
to asceticism and other-worldliness. When the times are out 
of joint some storm the barricades and others retire into a 
monastery. Thus it is that the greater part of the literature 
of our time is in one mood a literature of revolution and in 
another, often completely fused with it, a literature of escape. 8 

3. The Field of Reform 

This malaise of the spirit reflects, like the discomfort of a 
badly fitted shoe, the maladjustment of men to the way they 
must obtain a living. There are those who afe born handi- 
capped} by the deterioration of the stock from which they 
spring they are without the capacity to make their way. 
Others grow up handicapped by disease in childhood, by mal- 
nutrition and neglect. Others are the casualties of a vicious 
or stupid family life, carrying with them forever* the scars of 
inferiority and perversion. They do not adapt themselves 
easily. Then there are those who have been broken by the 
poverty and squalor of their youth, and who never do obtain 
an equal opportunity to develop their faculties. There is the 
whole unresolved task of educating great populations, of 
equipping men for a life in which they must specialize, yet 
be capable of changing their specialty. The economy of the 
division of labor requires, and the classical economics assumes, 
a population in which these eugenic and educational problems 

* E.g., Mr. Stuart Chase's alternating admiration for the machine technic 
and Mexican primitivism, his simultaneous disgust at industrialism and his 
enchanting vision of an engineering Utopia. Or the fascination exerted by 
D. H. Lawrence who fled from reality into sexual sensation with the 
fanaticism of an ascetic upon so many ardent sympathizers with Marxian 


are effectively dealt with. But they are not yet dealt with. 
Nor do they settle themselves, as the dogma of laissez-faire 
supposes. And so they must take their place upon the agenda 
of liberal policy. 

The economy requires not only that the quality of the hu- 
man stock, the equipment of men for life, shall be maintained 
at some minimum of efficiency, but that the quality should be 
progressively improved. To live successfully in a world of 
the increasing interdependence of specialized work requires a 
continual increase of adaptability, intelligence, and of enlight- 
ened understanding of the reciprocal rights and duties, bene- 
fits and opportunities, of such a way of life. 

But there is required no less, and again the classical eco- 
nomics takes this for granted, the conservation of the land 
and of all natural resources, and their progressive improve- 
ment by clearing, reclamation, and fertilization. The land 
and what is under it, the seas and the highways, are the patri- 
mony of all the generations to come, and all rights of private 
-property in this patrimony must, therefore, be subject to the 
condition that this natural inheritance will not be wasted or 
destroyed, that it will, on the contrary, be enriched. Since it 
would be as impossible for the new economy to produce wealth 
in an exhausted land as it is for a Chinese peasant to eke out a 
decent living on an eroded hillside, the conclusion is undeniable 
that conservation, in its broadest sense, including the zoning 
of urban and agricultural land, is a paramount obligation of 
a liberal state. That anyone who thought he was preserv- 
ing the system of free enterprise should have persuaded him- 
self to believe that the law must leave men fr$e to destroy 
the patrimony of their children is one of the curiosities of 
human unreason. 

The system requires not only great adaptability in men, but 
an even higher degree of mobility in capital. On the whole, 


the machines must come to the men rather than men to the 
machines. A civilized life is impossible for nomads who settle 
nowhere and do not put down deep roots in a particular place. 
For men who have just arrived and will soon depart tend to 
be crudely acquisitive. They are transients who have no 
permanent stake in any community, and there are no ties, other 
than the cash nexus, between them and their neighbors. They 
live only in the present, having no ancestral tradition fixed on 
any place and no care for posterity. The good life finds 
little encouragement where men do not feel themselves to be 
links in a chain from the past into the future, where they live 
from day to day without deep associations and long memories 
and more than personal hopes. There is no doubt that the 
industrial revolution decivilized great masses of men when it 
drew them out of their ancestral homes and gathered them 
together in great, bleak, anonymous, congested slums. 

It follows that if the necessities of a civilized life are to be 
accommodated with the new economy, the stipulation of the 
classical economics, that labor and capital must both be per- 
fectly mobile, has to be modified. Capital has to be more 
mobile than labor, sufficiently more mobile to compensate for 
the inevitable and desirable human resistance to a migratory 
existence. This is not to say that all the generations must re- 
main forever rooted in the place where they happen to be. 
But it does mean that the tides of population must move slowly 
if old communities are not to be devitalized by emigration and 
new communities overwhelmed by unassimilable immigration. 
It should, therefore, be the aim of policy to mitigate this hu- 
man evil by v using social controls to induce inanimate capital, 
rather than living men to achieve high mobility. It should 
be the aim df educational policy to make most men versatile 
and adaptable in the place where they were born, and of eco- 
nomic policy to make capital mobile. 


In the early industrialism of the nineteenth century it was, 
perhaps, technically impossible to move capital and therefore 
it was necessary to uproot and move men. But the techni- 
cal obstacles can be overcome. They are not nearly so for- 
midable as they were a hundred years ago when the power to 
operate machines was generated by steam engines or water* 
falls, when only products high in value as regards their bulk 
could be transported cheaply, when the capital available for 
investment was personal and under the personal direction of 
its owner. Modern inventions enable men to generate power 
almost anywhere and to transmit it long distances j cheap trans- 
portation permits the movement of bulky raw materials; the 
development of the limited-liability corporation has sepa- 
rated the ownership of capital from the management of enter- 
prise. All these things make it feasible to use the infinitely 
greater mobility of capital to accommodate industrialism to the 
human need to live in settled communities. It is technically 
possible now, as it was not a hundred years ago, for capital 
to move to communities and thus to lift the curse of urban 
congestion and of ruthless migration. > * 

But if this is to be done, it must be the aim of law and social 
policy to facilitate and encourage the mobility of capital. 
Capital must be given security when it has moved to distant 
places and is under the control of remote managers. Thus 
there must be required stringent liability on the part of pro- 
moters for the worth and good faith of the securities they 
issue, and stringent liability on the part of managers for their 
stewardship of the shareholders' capital. 

But that is not all. If capital is to achieve the necessary 
mobility, it must not become entrenched, uneconomically bot- 
tled up, in certain favored corporate structures. This is what 
happens when the managers are permitted to retain the profits, 
over and above sinking funds and working reserves, and to re- 


invest them, without submitting to the test of the competitive 
capital market. The effect of this is to aggrandize certain 
corporations beyond their true economic worth, and to cause 
a congestion of capital at the wrong places. No one who 
really believes in the principle of a free market as the regu- 
lator of the economy can, I think, fail to see that the limited- 
liability corporation must be deprived of the right to retain 
profits and invest them, not according to the judgment of the 
market but at the discretion of the managers. For the re- 
tention of the profits immobilizes capital, whereas the economy 
of the division of labor requires that capital shall move readily 
to the places and to the men who make the highest bids for it. 
Furthermore, although the separation of ownership from 
management is necessary to the operation of the economic or- 
der, the separation of control from management is not. The 
development of holding companies, that is to say, of corpo- 
rations which own the control of the management of other 
corporations, is an exceedingly dubious innovation. They 
establish industrial empires within which planning and adminis- 
trative discretion* supplants the market as the regulator of 
enterprise. Their size is often mistaken for evidence of their 
economic success, but actually they suffer from the same vices 
which are inherent in any administered economy. There is 
no true ascertainment of costs and prices within the corporate 
empire. The constituent enterprises deliver goods to each 
other, not at the cost which would be set in a free market, but 
at a cost fixed by the supreme management. Thus the man- 
agement of a giant corporation which dominates dozens of 
distinct industrial operations is, in the economic sense, irra- 
tional. It does not really know whether its rolling mills are 
subsidizing its captive coal mines- or are being exploited by 
them. It has no true economic criterion to determine whether 
its investments in blast furnaces or in railroads should be in- 


creased or retarded. I am talking, of course, of big business, 
which is big because it controls many separate enterprises, and 
not of separate enterprises which have grown big. The two 
are often confused, though they are wholly distinct: the little 
business which has grown big by making more and more of 
the product it makes is a success by the test of the market; 
but the business which has been made big by use of the holding 
company, or by some other corporate device, or by community 
of financial control, is the result of a deliberate attempt to 
evade the test of the market. 

Big business of that sort is Wholly inconsistent with the 
principles of a free economy, and is, in fact, the form which 
collectivism takes among businessmen. In this connection it 
should be remembered that the socialist movement is based 
on the notion that when big business has suppressed free en- 
terprise and substituted administrative discretion for the mar- 
ket, the business is ripe for socialization and the transition 
will be easy: all that is required is to expropriate the share- 
holders and to make the managers civil servants. In practice 
it would not be so easy as that, as Lenin quickly discovered 
in 1918.. But it is true that if the collectivist tendency of 
big business is encouraged, the nationalization of big busi- 
ness will certainly be attempted. So much sovereign power 
outside the objective regulation of free markets can never 
remain long in private hands. Just as the East India Com- 
pany was transformed into the government of India, so the 
giant corporations will, if they are allowed to continue, become 
in effect departments of the government. 

Big business of this sort is regarded alike by socialists and 
big businessmen as the result of the inevitable evolution of 
capitalism. On this point Karl Marx and Judge Gary were 
in complete agreement. But they were mistaken. The 
United States Steel Corporation did not grow. It was con- 


trivcd. It is a product nbt of a victory in the struggle to sur- 
vive but of a bold and ingenious manipulation of the law gov- 
erning corporations. The holding company could not have 
been created without exercising privileges that the law offered, 
and since those privileges of the law can be withdrawn or 
modified in accordance with public policy, it cannot be true 
that the giant corporation represents the necessary evolution 
of modern industry. It is a fortuitous evolution from the 
condition of the law, and it marks a vital point at which the 
law was maladjusted to the economy, and has perverted it. 
Thus the renovation of corporate law so as to prevent busi- 
ness from becoming any bigger than it can become in the test 
of the market is a necessary item on the agenda of liberalism. 

The reader will by this time have become aware of how far 
removed from laissez-faire are the requirements of liberalism. 
But even this cursory survey is by no means concluded. The 
economy of the division of labor in free markets depends upon 
the assumption, not only that men will save in order to invest 
in capital goods, but that the savings will in fact be invested, 
that the capital goods will in fact represent savings. The 
earlier economists preached the virtue of thrift, but they made 
the assumption that all savings were automatically invested, 
that all investments were necessarily savings. The assump- 
tion may have been substantially correct in an age when men 
invested their own sayings in their own business, or borrowed 
directly the savings of some other person. But the assump- 
tion is incorrect in an age when men deposit their savings with 
bankers who finance investment with credit based on frac- 
tional reserves. 

Under this system saving and investment are widely sepa- 
rated and distinct operations, and it does not by any means fol- 
low that what is saved is invested or that what is invested has 
been saved. This is, it would now seem, one cause, perhaps 


a principal cause, of the business cycle. For when less is 
invested than is saved, there is deflation that is to say, an 
insufficient demand for goods; where more is invested than is 
saved, there is inflation that is, an excessive demand for 
goods. In the deflation, purchasing power, which is merely 
goods and services available for exchange, is locked up; in the 
inflation, artificial purchasing power, which represents no goods 
and services available for exchange, is enabled to bid for goods 
and services. 

The evil effects and the dangers of the business cycle need , 
no elaboration. It is clear that social controls are 'required 
which will keep the real savings and the real investments of 
the community equal to each other. The development of 
these social controls was, until this generation, almost com- 
pletely neglected by liberal economists and statesmen. They 
failed to realize that when saving and investment become dis- 
tinct, the value of money becomes the accidental by-product of 
the transactions between bankers and their clients. The prin- 
cipal money of a modern society consists not of coin stamped 
in the government mint but of bank deposits that expand and 
contract with the creation of private credit. Thus the money 
which is the medium of the exchange economy, the standard 
in which are expressed the prices that regulate the division of 
labor, was until recent times dependent upon accident. 4 The 
value of money has fluctuated violently during the century and 
a half in which the industrial revolution has been under way. 
Yet the intricate interdependence of mankind is inconceivable 
without money. For this interdependence consists in count- 
less exchanges of an infinite variety of goods and services made 

4 Such as upon the discovery of gold deposits, of .new metallurgical pro- 
cesses in the production of gold and silver, upon speculative booms, bank 
failures and panics, and always upon banking transactions necessarily entered 
into without thought of their effect on the value of money. 


every hour of every day in countless markets. These ex- 
changes could not be made by direct barter: they are possible 
only because all goods and services are reducible to a common 
denominator. They are valued, not in relation to each other, 
say a bushel of wheat against a music lesson, but in relation 
to money. They have a price, and in so far as money is not 
neutral, prices will be unjust and all economic calculation im- 

The measures which would be effective to maintain a neutral 
value for money do not concern us here. We are engaged 
in staking out the field of required policy in an exchange 
economy, noting the main headings of the agenda of liberal- 
ism. It is enough to say here that the experience of more 
than a century has demonstrated that the automatic gold stand- 
ard, if in fact such a standard ever existed, does not provide a 
sufficiently neutral money for a mode of production based on 
the world-wide division of labor. Monetary reform, and what 
is now called monetary management, are, therefore, necessary. 

We come next to the fact that the actual markets in which 
the economy is regulated are very far from being the ideal 
markets which the classical economics assumes. All buyers 
and sellers of goods and services are not equally aware of the 
real state of the market, are not equally able to make free, 
genuinely informed bargains. 5 Those who can wait have a 
great advantage over those who must sell at once. Thus the 
farmer with a perishable crop has less bargaining power than 
one whose crop can be stored and will keep. The owner of 
the land can in general wait longer than his tenant. But the 
man with the least bargaining power is the man who has only 
his labor to sell. If he does not work to-day, the product of 
that day's work is totally lost forever. The longer the seller 

9 Cf. J. A. Hobon'i The Iniwtrid System, Ch. IX, "The Mechanism 
of Markett." 


can afford to wait, the more time and opportunity he has to 
study the market in order to obtain the maximum price. Thus 
there are enormous differences in the efficiency of the various 
markets. In some the price comes close to expressing the true 
equilibrium of supply and demand; in others the price repre- 
sents little more than the ignorance and helplessness of one 
party confronted by the informed resourcefulness of the other. 

Inequality of bargaining power afflicts particularly farmers 
dealing with middlemen, unskilled workingmen dealing with 
large employers, the poor in their purchases, and the inves- 
tors of small savings. They cannot wait. They do not 
know. They transact their affairs in exceedingly imperfect 
markets. Quite properly they distrust the markets and re- 
member the many occasions where they have been outwitted, 
out-traded, and victimized. These wretched markets are an 
invitation to all the fraud and sharp dealing, the usury, jerry- 
building, and shoddiness, the quackery and shystering, of the 
capitalistic underworld. 

Obviously, it is the duty of a liberal society to see that its 
markets are efficient and honest. But under the laissez-faire 
delusion it was supposed that good markets would somehow 
organize themselves or, at any rate, that the markets are as 
good as they might be. That is not true. The improvement 
of the markets must be a subject of continual study in a liberal 
society. It is a vast field of necessary reform. In its first 
phase it is merely the elaboration of a principle universally ac- 
cepted from earliest times, that it is the function of govern- 
ment to see that weights and measures are honest. Applied to 
the complexities of the modern exchange economy, where goods 
are made by technical processes which only experts understand, 
the principle of honest weights and measures must mean a 
drastic modification of the old rule, caveat emptor. The buyer 
is no longer able to judge the technological honesty of the 


goods he is offered in the market. He does not know whether 
they are what they are advertised to be. So it becomes neces- 
sary to make the seller liable for an untruthful presentation 
of his wares, to make it unlawful to sell harmful products, to 
stipulate that only goods of the same quality shall bear the 
same label, to provide the purchaser with effective means of 
finding out whether he is getting the best that can be had for 
the money. 

Along with measures to make the markets genuine it is 
necessary to take steps to reduce the evil of necessitous bargain- 
ing. Thus a liberal state cannot be neutral as between those 
who have too little bargaining power and those who have 
too much power. It must, by its own principles, encourage 
and protect the cooperative organization of producers, such as 
farmers and workingmen, who must sell at once, and at any 
price offered, and in ignorance of the true supply and demand 
if they bargain individually. Just as the state, by granting 
the privilege of incorporation with limited liability, has made 
possible the collective employment of individual savings, so it 
might well devise a form of incorporation which would create 
collective rights and corresponding duties for organizations of 
farmers, workingmen, and consumers. 

That such organizations would be under the temptation to 
become monopolies in restraint of trade is obvious. We know 
this from the fact that business corporations do so often yield 
to that very temptation. Thus an indispensable principle of 
liberal policy is to outlaw monopoly and the unfair trade prac- 
tices which lead to monopoly. There is a rather general im- 
pression that all business tends towards a condition of monop- 
oly, and that may be true in a society which is drifting without 
a clear conception of the nature of its own economy. But once 
men take seriously the idea that they are committed to a mode 
of production which can be regulated only in free markets, they 


will reexaminc the laws under which monopoly flourishes. 
They will find, I am convinced, that few effective monopolies 
have ever been organized and that none can long endure ex- 
cept where there is a legal privilege. It may be a franchise, 
or the exclusive possession of a limited natural product, or a 
patent, or a tariff, or simply an exploitation of the corporate 
device. But if monopoly depends upon -a privilege that the 
law concedes, then monopoly can be destroyed and prevented 
by changing the law. 

Still we have not come to the end of our survey of the fields 
in which liberal policy must operate in order to adapt the social 
order to the exchange economy. By its very nature the econ- 
omy is dynamic that is to say, the technic and the localiza- 
tion of production is in continual change. Industries die and 
others are born, and within industries some enterprises are 
growing and others declining. Industries which were estab- 
lished in one place are replaced by industries in another place, 
sometimes halfway around the world. In the long view 
this is industrial progress, but in the close view its human 
evil is tragic. At no point, perhaps, were the latter-day 
liberals more insensitively doctrinaire than in the complacency 
with which they accepted the human costs of industrial prog- 

Yet there is nothing whatever in the necessities of the new 
economy which compels society to be indifferent to the human 
costs. There is no reason whatever why some part of the 
wealth produced should not be taken by taxation and used 
to insure and indemnify human beings against their personal 
losses in the progress of industry. If technological improve- 
ment increases wealth, and, of course, it does, if society 
as a whole is richer when an industry moves from a place where 
costs are high to one where they are lower, then some part of 
that increased wealth can be used to relieve the victims of prog- 


ress. It can be used to tide them over while they are chang- 
ing their occupations, to reeducate them for new occupations, 
to settle them in new places if they have to move. 

Not only is there no reason why a liberal state should not 
insure and indemnify against its own progressive development, 
but there is every reason why it should. For if it is properly 
devised, such a system of social insurance would facilitate the 
necessary technological changes, and reduce the very human 
resistance which comes from those who now see themselves 
the appointed victims of progress. No one can blame a man 
for hating a machine that will place him in the bread line and 
unfit him for the only job he has learned to do. 

It is not only the industrial workers, however, who suffer 
from industrial progress. All producers are subject in some 
degree to the same risk when new processes are invented, when 
more efficient competitors arise, or when tastes change. To be 
sure, they cannot all be insured and indemnified out of the 
public treasury. But their losses can be reduced. How that 
is to be done is a problem of great complexity which I would 
not pretend to be able to solve. But the character of a pos- 
sible solution may be indicated by suggesting that business en- 
terprise would be better able to face the risks of industrial 
progress if corporations were required to amortize their capi- 
tal debts within the efficient life of the machines and processes 
that the capital has bought, and were required to obtain new 
capital in the money market rather than out of accumulated 
profits. This would no doubt make for smaller corporations. 
But smaller corporations are more mobile than big ones. 
They can dissolve more easily and new ones can be created 
more easily. Such corporations would be more efficiently 
adapted to a dynamic economy, and they would not raise the 
problems and the tragedies of semi-obsolete corporate levia- 
thans that are unable to live and unable to die. 


It will be seen that the agenda of liberalism is long and yet I 
should make no claim that mine is complete. The adaptation 
of the social order to the division of labor is of necessity an im- 
mense undertaking since it is the finding of a new way of life 
for mankind. In all its ramifications it must, therefore, tran- 
scend the understanding of any man who lives in the midst of 
it, or the programme of any party, or the reforming energies 
of any one generation. I have sought only to indicate the 
more urgent and obvious points at which modern society is 
maladjusted to its mode of production, and then to illustrate 
the unfinished mission of liberalism. The agenda refute the 
notion that liberalism is the sterile apologetic which it became 
during its subjection to the dogma of laissez-faire and to the 
misunderstanding of the classical economists. The agenda 
demonstrate, I believe, that liberalism is not the rationaliza- 
tion of the status quo, but the logie of the social readjustment 
required by the industrial revolution. 

If, now, we consider the agenda as a whole, we shall see, I 
think, that they imply a different distribution of incomes from 
that which now obtains in most organized societies. For one 
thing the effect of these reforms would be drastically to reduce 
the opportunities for making money by necessitous bargains 
and by levying tolls through the exercise of legal privileges. 
These reforms strike at the source of the big incomes which 
arise from the various kinds of monopoly, from exclusive rights 
in land and natural resources, from bad markets in which the 
ignorant and the helpless are at a disadvantage. Income 
arising from these inequalities of opportunity and legal status 
are unearned by the criterion of the exchange economy. They 
are parasitical upon it, not integral with it, and if the actual 
world corresponded with the theory of the classical economists, 
these unearned incomes would not be obtained. They are not 
the wages of labor or management, the interest on capital, or 



the profits of enterprise, as determined in free and efficient 
markets, but tolls levied upon 'wages, interest, and profits by 
the subversion or the manipulation of the market price for 
goods and services. 

The reformers of liberalism must aim, therefore, at correct- 
ing the conditions under which such unearned incomes arise, 
and in so far as the reforms are thoroughgoing and effective 
the unearned incomes will not arise. Now the correction of 
the conditions involves, as we have seen, large social expendi- 
ture on eugenics and on education; the conservation of the 
people's patrimony in the land and natural resources; the de- 
velopment of the people's estate through public works which 
reclaim land, control floods and droughts, improve rivers and 
harbors and highways, develop water power, and establish 
the necessary facilities for transporting and exchanging goods 
and services; providing the .organization of markets by infor- 
mation, inspection, and other services; insurance and indemni- 
fication against the risks and losses of technological and eco- 
nomic change; and many other things, such as providing the 
opportunities for recreation which would not otherwise exist 
in specialized and congested communities. 

These public investments and social services are, of course, 
expensive, and the process of financing them is a redistribution 
of income. In a society in which there was no unearned in- 
come, the taxation to pay for them would be in effect a form 
of forced saving for investment in the people's estate, diverting 
a part of the income spent on private consumption to such forms 
of social consumption as schools, playgrounds, museums, and 
the like. But in society as it now is, where a progressive pro- 
portion of most of the larger incomes is unearned, the primary 
cost of the public investments and social services can be prop- 
erly charged in a graduated scale against the larger incomes. 
If the science of taxation were highly developed, and the meth- 


ods of public budgeting were refined, the cost of reform/ 
as distinguished from the support of government and of social 
consumption, could be fixed with a nice discrimination, not on 
the size of an income/ but on the unearned portion of all in- 
comes. And in the higher refinements of a just system of 
taxation, that part of an unearned income now spent for private 
consumption by the possessor would be completely expropri- 
ated. It would be recognized that while an unearned income 
which is reinvested replenishes the capital goods of the whole 
society, unearned income spent on consumable goods is sheer 
privilege. These refinements of public finance are still be- 
yond our knowledge of the science of taxation, and above all 
beyond the present competence of officials to administer them. 
They indicate, however, the direction in which reformers can 
work. In the practical present a cruder policy is unavoidable: 
one which redistributes large incomes by drastic inheritance 
and steeply graduated income taxes. 

There need be no reluctance in the avowal that a greater 
equalization of incomes, if brought about in the way outlined 
here y is the necessary objective of a liberal policy. I stress 
the, manner because a mere leveling of incomes by taking from 
the rich and giving doles to the poor would defeat itself and 
would merely paralyze and impoverish the whole economy. 
The equalization must be effected by measures which promote 
the efficiency of the markets as regulators of the division of labor; 
they must strike, therefore, not at the profits of successful com- 
petition but at the tolls of monopoly. 

The taxes levied on the rich must be spent not on doles to 

6 The tolls of the monopolist and the gains made from necessitous bar- 
gains, from sweating, adulterating, bootlegging, racketeering, would by pub- 
lic justice be applied to remedying the evils on which they batten. 

Thus the large profits of a successful entrepreneur in a freely competi- 
tive market would be taxed at a lower rate than the smaller income of the 



the poor but on the reform of the conditions which made the 
poor. The dole, by which I mean cash given by the govern- 
ment directly to the poor, is a relief of, but not a remedy for, 
their poverty, whereas money spent on public health, education, 
conservation, public works, insurance, and indemnification 
is both a relief and a remedy. It improves the produc- 
tive capacity both of the individual and of the national patri- 
mony from which he must earn his living. By improving the 
marginal productivity of labor, it raises the minimum wage 
of all labor 8 out of an increased national dividend. This is 
equivalent to saying that some portion of the national divi- 
dend must be invested, in order to conserve and improve the 
foundations of the economy, in the people and in the na- 
tional estate from which they earn their living. 

The returns on these investments are real enough. But they 
are imponderable and deferred. Values created by the schools 
in educating the next generation, by public works to preserve 
the fertility of the soil, do not have a market price and would, 
therefore, not be undertaken by ordinary private enterprise. 
This is the realm of investment by public authority which does 
not have to pay its way and show returns measured in money 
within a short span of time. For the most farsighted private 
investment cannot look much beyond one generation $ only the 
exceptionally prudent plant trees for their children. But a 
society, as Burke so eloquently said,* comprehends the dead, 
the living, and the unborn. And as the living inherited the 
national estate from their ancestors so they must transmit it 
to their posterity. This carries with it the obligation to plough 
back some portion of the current income into the foundations 
of the social economy. 

8 Cf. John Bates Clark's T\e Distribution of W tilth, passim. 
* "Reflections on the Revolution in France," Works (ed. by H. G. Bohn, 
London), Vol. II, pp. 368-69. 


What proportion it is necessary and wise to plough bade I 
should not pretend to say: the answer to that lies in the field 
of contemporary policy rather than of principle. But it is 
clear, I think, that the proportion increases with the increase 
of the national dividend per capita. For as more and more 
persons achieve a comfortable standard of life and still have 
income to spare, the urgency of the demand for investment 
in ordinary capital goods declines. Beyond a certain point 
men would rather work less than earn more. Beyond a cer- 
tain point they would rather save than spend. So in the rela- 
tively richer societies there is a strong tendency for the sup- 
ply of capital to become so large that the rate of interest falls 
to a level where there is little inducement to invest it in new 
enterprise. There is a strong preference for liquidity and 
security. 10 In a rich society the psychology of the rentier tends 
in some measure to supplant the psychology of the entre- 
preneur. Under these circumstances the use of the taxing 
power is indicated in order to pump the surplus funds of the 
rich out of the ordinary capital market and into public invest- 
ments. The very fact that the rate of interest is so low that 
there is not sufficient inducement to attract capital to private 
enterprise would appear to be proof that unless the excess 
savings are publicly invested they will be hoarded and wasted. 
For these excess savings do not fructify industry j on the con- 
trary they represent wealth withheld from use, and this with- 
holding, whether in hoards or in imprudent investment, is ac- 
companied by the unemployment and the extreme poverty of 
the marginal workers. 

When these conditions obtain, wealth is maldistributed, and 
in so far as the maldistribution is not corrected at its source by 
the suppression of the unearned increments of monopoly and 
necessitous bargaining, it has to be corrected by taxation and 

" Cf . J. M. Keynet's The General Theory of Employment. 


public investment. To divert excess savings from the hoards 
of the rich and to plough them back into the improvement 
of the quality of the people and of their estate is, there- 
fore, required not only by the long view of the imponderable 
national interest, not only as an expedient to 'allay discontent, 
not only as a matter of social justice, but as a requisite for pre- 
serving the equilibrium of the exchange economy itself. 

The earlier economists could not foresee this because in their 
time the private demand for capital was so urgent. They as- 
sumed that it would always be urgent. But they underesti- 
mated the productivity of the new economy and they over- 
estimated the acquisitiveness of human nature. Gradually 
we have learned to see that men do not care to go on accumu- 
lating wealth ad infinitum. When they attain a middle-class 
standard of life the wants of most men are sated; they do 
not have the tastes for spending a lot more money. To earn 
it is not worth the trouble; to spend it is more trouble than 
it seems when in the abstract they envy the very rich. To be 
sure, the middle-class standard of life rises. But it is not 
true, as someone has said, that wealth must go on increasing 
until the last Hottentot lives like a millionaire. At least it 
is not true that the last Hottentot would wish to work hard 
enough to be a millionaire, or would care to devise ways of 
spending a millionaire's income. Long before that point is 
reached in the actual world the profit motive loses its incentive, 
and men prefer leisure, security, and intangible values to fur- 
ther economic gains. The acquisitive psychology of the nine- 
teenth-century economic man is no longer the psychology of 
real men who have reached the slowly rising level of middle- 
class comfort. 

It will be evident from what I have said that this maldistri- 
bution of wealth in modern society arises from two interesting 
causes: in brief, from unearned increments on the one hand and 


on the other from the capacity of the economy to produce 
more wealth than those who enjoy a middle-class standard 
care to consume or can profitably invest. 

The maldistribution due to unearned increments has to be 
corrected at the source by reforms which strike at monopoly, 
privilege, and necessitous bargains. In so far as these re- 
forms are effective they will tend to equalize, though, of course, 
they will not level out the distribution of income. Under a 
regime of equal opportunity, there could not be any such gross 
inequality of income as obtains to-day in a country like the 
United States. There would not be the large inheritances} 
under true competition only the successful pioneers would earn 
very large profits. In fair markets, with adequate mobility of 
capital and adaptability of labor, interest rates would be low. 
The disproportion of the highest salaries and the lowest wages 
would be greatly modified, for while there are rare persons, 
say motion-picture stars, whose abilities have a unique value 
in the market, most successful men do not have such unique 
abilities. As equalized inheritance and education made op- 
portunity more nearly equal, the increasing supply of able en- 
trepreneurs and managers would reduce the salaries and bo- 
nuses they now command in the market. 

Correction of the maldistribution arising from unearned in- 
crements would, by equalizing incomes, tend to bring some 
men up and others down to a middle-class standard of life. 
At that standard, consumption would increase and excess sav- 
ings would diminish. But the reforms would not in prac- 
tice correct at their source all the injustices of monopoly, privi- 
lege, and necessitous bargains. In a wealthy society, there 
would still remain maldistribution, arising not from injustice, 
but from the accumulation of more wealth than its possessors 
need for the then prevailing middle-class standard of life 
or than they can effectively use in private enterprise. This 


maldistribution has to be corrected by public investment in 
the eugenic and educational improvement of the people, in the 
conservation and basic development of their patrimony in the 
land and its resources. These public investments would draw 
upon the excess capital through the levying of taxes and 
through borrowing at the lowest possible rate of interest. 

Thus the two methods converge upon the same end, which 
is to equalize very considerably the distribution of income. 
This is greatly to be desired. Since the time of Aristotle it has 
been recognized by the wise that extremes of riches and pov- 
erty, that spectacular differentials of income, are dangerous and 
pernicious in any society. The enlargement of the middle 
class as against the poor and the rich must, therefore, be sought 
by anyone who wishes a society to live soundly and endure 
long. For the great inequalities do not represent the true in- 
equalities in men's native endowment, or in their characters 
and their diligence; thus the inequalities obscure and distort 
the whole moral conception of income as the reward of useful 
work, of poverty as the punishment for laziness and impru- 
dence. Because to-day it cannot be said sincerely that wealth 
is the reward of virtue, the very notion that man must earn 
his living by his own effort is gravely discredited. And inas- 
much as the maldistribution of income causes capital to ac- 
cumulate excessively in the presence of destitution and want, 
we have the paradox of poverty in the midst of plenty which 
makes the whole economy appear irrational and unjust. 

4. The Radical Conservatism of Liberal Reform 

These agenda are not to be taken as a definitive and compre- 
hensive outline of liberal social reform. If, as I am arguing, 
it is the mission of liberalism to discern the guiding principles 
of the transition from the primitive way of life in relatively 


self-contained communities to a way of life in a Great Society 
of interdependent specialists, then liberalism is concerned with 
nothing less than a readaptation of the human race to a new 
mode of existence. 

That this is no small enterprise we know from the expe- 
rience of the Romans, who established, but could not main- 
tain, a Great Society on the shores of the Mediterranean Sea. 
For nearly a thousand years after the decline and fall of that 
Great Society, western men followed once more a self-con- 
tained bellicose way of life. Then the enterprise of .living in 
an exchange economy was resumed, and, as a matter of course, 
men becafne interested once more in the classical philosophy 
which had reflected the Heeds and guided the policy of the 
men in the Great Society of the ancient world. This was the 
renascence of a highly civilized way of life after the long re- 
action to the primitive way of life in the Dark Ages. Nat- 
urally enough, the first centres of the renascence were the 
commercial cities, like Florence and Paris, and naturally enough 
England and the Netherlands, the first western countries to 
revive an extensive international commerce, were the first 
homelands of modern liberalism. For only a people living 
in an exchange economy needs, or can hope to conceive, a lib- 
eral philosophy. It is no coincidence that the very conception: 
of equal rights under a common law to which all men, includ- 
ing rulers and sovereign states as well, are subject should have 
been formulated by men like Coke, Selden, Locke, and Grotius, 
who were members of a society where men lived by large trans- 
actions. It is no .coincidence that the expansion of English 
commerce under Queen Elizabeth was followed by the strug- 
gle for responsible government under the Stuart kings} or 
that Adam Smith should have been moved to write The Wealth 
of Nations at the very time when the American and the French 
Revolutionists were proclaiming the Rights of Man. 


The modern phase of the readjustment of man to the divi- 
sion of labor reaches bade at least to the beginnings of the sev- 
enteenth century in England. It is not completed. For long 
ages it will not be. Thus the agenda of liberal reforms which 
I have ventured to survey is intended to illustrate the char- 
acter and the order of magnitude of the reforms which are 
obvious and urgent in our time. In so far as they are truly 
discerned they will be deeply consistent with the classical herit- 
age and with the liberal tradition as it has been progressively 
discovered over this period of three hundred years; they will 
be the continuation of, and not a reaction against, the work of 
men whom we properly revere as the liberators of mankind. 
If, then, it is said that the agenda of liberalism would dis- 
turb many vested rights, there is no denying it. It has never 
been the true tradition of liberalism that its function is to de- 
fend the status quoj on the contrary, its function has been to 

reform the status quo in order that laws and institutions may 
conform to the agricultural and industrial economy by which, 
since the close of the Middle Ages, men have had to live. If 
it is said that the liberal reforms recognize the same abuses 
as the collectivist reforms, that also is true. Are not the social 
maladjustments obvious? Is not the discontent they provoke 

warranted? Surely the question is how to cure the malad- 
justments, not how to suppress or ignore the discontent. It 
would be a sorry political philosophy which taught that blind- 
ness is insight, that indifference is wisdom, and that inertia is 
a policy. 

The collectivist reforms, as I see them, are a mistaken remedy 
for real abuses. The abuses are real, but the collectivist men- 
tality belongs to the ages before the industrial revolution: it 
is the* ideology of a more primitive, self-contained economy. 
That is why totalitarian collectivist states revert so quickly to 
the caste system at home and .to depredations against their 


neighbors. For the collectivism are in rebellion against the 
interdependence of mankind arising from the division of labor. 
Their doctrine is based on a radical failure to understand the 
true nature of the exchange economy: so even partial collectiv- 
ist measures paralyze the economy of production and en- 
gender indecisive and unending struggle among groups and 
classes and nations. 

I have called gradual collectivism the polity of pressure 
groups and I think the description is correct. But now that 
we have examined the maladjustment of the social order with 
the economy, I must add that the pressures of the groups are 
due to the pressure of genuine circumstance. They crystal- 
lize at those points where the social order is in fact humanly 
maladjusted to the economy. When men feel that their 
accustomed way of life is jeopardized by the dynamic changes 
resulting from the progressive division of labor, the pressure 
groups are defensive and their policy is in the broad sense 
of the term protectionist. Aggressive pressure groups appear 
where inadequate social controls provide opportunities for 
exploitation. But almost always both are symptomatic of ur- 
gent practical difficulties arising from the frictions and dis- 
turbances of a revolutionary economy in an incompletely re- 
formed social order." 

11 A reexamination of the demands of the principal pressure groups in 
the light of this hypothesis would, I think, be suggestive. It is, of course, 
beyond the scope of this book and also beyond the range of my own de- 
tailed knowledge of the facts to attempt here anything like a thorough 
and comprehensive survey. That is a task for many specialists in many 
branches of a revivified political economy a political economy, let as note, 
which reunites cnce more the study of politics and of economics. This false 
separation, which has caused scholars to drop the term "political economy/' 
is almost certainly the consequence of the two cardinal errors which we have 
examined, of the preoccupation with laissez-faire in politics and of the mis- 
conception of the significance of the classical economists. Politics and eco- 
nomics have lived in two separate intellectual worlds only in the era when 
political science was the study of what could not be done and economics was 
the rationalization of what need not be done. 


I realize that since the existing rights of property and con- 
tract are greatly affected by the liberal agenda, many will re- 
gard such a disturbance of the status quo as socialism. But 
that is sheer obfuscation of the mind. It is true that liberal- 
ism recognizes the same social problems as does gradual col- 
lectivism, and that its reforms cut deep. How could it fail 
to recognize the problems and still pretend to guide human 
action? It is true, also, that the liberal remedies require the 
liquidation of some, *and the modification of many, vested 
rights. How can social maladjustment be cured except by 
altering vested rights? The status quo cannot be reformed 
and yet preserved as it is. But, except to the prejudiced, it 
will be clear that liberal reforms differ radically from collectiv- 
ist reforms. The difference is that liberalism seeks to im- 
prove the exchange economy whereas collectivism would abol- 
ish it. Liberalism is radical in relation to the social order but 
conservative in relation to the division of labor in a market 
economy. In the liberal philosophy the ideal regulator of the 
labor of mankind is the perfect market; in the collectivist phi- 
losophy it is the perfect plan imposed by an omnipotent sov- 

Thus, while liberalism must seek to change laws and greatly 
to modify property and contract as they are now recognized 
by the laws, the object of liberal reforms is to preserve and 
facilitate the division of labor in the existing exchange econ- 
omy. It is in order to fit men for their new way of life that 
the liberal would spend large sums of public money on edu- 
cation. This does not mean only the training of versatile 
specialists, though that is necessary. It means also that the 
whole population must be provided with the cultural equip- 
ment that men must have if they are to live effectively, and 
at ease with themselves, in an interdependent Great Society. 
The liberal reforms lay great emphasis on the conservation of 
natural resources and their development: the purpose of these 


reforms is to maintain the physical foundations of the division 
of labor. The liberal attack on monopoly; unfair competition, 
and necessitous bargaining has as its guiding purpose the main- 
tenance of that equal opportunity which the exchange economy 
presupposes and a high degree of divided labor requires; the 
method by which liberalism controls the economy is to police the 
markets, to provide in the broadest sense honest weights and 
measures, to make the bargains represent the exchange of true 
equivalents rather than the victory of superior strength, inside 
information, legal privileges, conspiracies, secret combinations, 
corruption, and legalized sharp practices. 

Necessarily the liberal reforms run counter to much that 
the law now tolerates or protects. This is inevitable because 
the law now tolerates and protects many practices which make* 
it impossible for men to live successfully in the economy of the 
division of labor. But liberalism, unlike collectivism, is not a 
reaction against the industrial revolution. It is the philosophy 
of that industrial revolution. 12 The purpose of liberal re- 
form is to accommodate the social order to the new economy; 
that end can be achieved only by continual and far-reaching 
reform of the social order. So however much they may re- 

u That it is correct to describe liberalism as the philosophy of the division 
of labor in an exchange economy is attested by the historical evidence. The 
prophets and the heroes of liberalism from Grotius to Adam Smith and 
Benthtm, from Coke and Pym and Cromwell to the American and the 
French Revolutionists were the heroes of the movement which enabled 
the new exchange economy to establish itself in place of the older self- 
sufficient and isolated local economy. That liberalism is the philosophy of 
the exchange economy is acknowledged by the tollectivists who deride it, 
calling it the philosophy of a "business civilization." Cf. Laski's The Rise of 
European Liberalism. Since they seek to destroy the exchange economy and 
to erect in its* place an authoritarian ordering of the life and labor of society, 
they are, of course, irreconcilably hostile to the liberal philosophy. Whether 
they are fascists, communists, or gradual collectivists, they recognize that 
liberalism is their great antagonist. In this they are right. The real issue 
is not among the collectivist sects but between liberalism and all the collectiv- 
ists. For liberals seek to preserve and perfect the economic order which col- 
lectivists would destroy. 


tembfe each other superficially, the difference between the 
two philosophies is radical tnd irreconcilable. The collectiv- 
ist uses the power of the state to direct, and in the last analy- 
sis to administer, the production and the consumption of 
wealth} the liberal uses the power of the state to preserve and 
promote that freedom of exchange which is the essential prin- 
ciple of the new mode of production. 

If, as in the second half of the nineteenth century, the need 
for progressive readjustment is misunderstood, neglected, and 
resisted, the accumulated maladjustments must lead to illib- 
eral reaction. In our time the liberal philosophy is engaged 
in a struggle to survive and to be reborn, and in this struggle its 
own failings are the chief strength of its opponents. Liber* 
alism is the normal philosophy of men who live in a Great 
Society. But for the fact that the liberal philosophy became 
frozen in its own errors, and could no longer guide the re- 
adaptation of the social order to the economy, it would never 
have been conceivable that men who had prospered in free 
countries should be tempted to regard the primitive tyrannies 
in Russia, Italy, or Germany as the beginnings of a better life 
for mankind. That incredible paradox, which causes men who 
have fought gallantly for the civil rights of cranks and fools 
in America to condone the suppression of all civil rights in 
Russia," would never have infected the progressive movement 

11 &f* cf. The New Republic, February 17, 1937, on "Russian Politics in 
America," discussing the trial of Karl Radek and other Old Bolsheviks: "It is 
not in accord with the principles of civil liberty to convict accused persons on 
the basis of confessions unsupported by other evidence. But the court 
stated there wai documentary and other conclusive evidence, brought out in 
die preliminary hearings, but excluded from the public trial for reasons of 
policy (protection of secret agents, or avoidance of international compli- 
cations?). This evidence was what forced the confessions. The New Re- 
public then concludes that, considering the pros and cons, <( believers in civil 
liberty" should keep an open mind as to the guilt of the defendants) and ig- 
nore the procedure by which the Russian State convicted them! 


had not the latter-day liberals gone up a blind alky and come 
to a dead end* 

So I am proceeding on the assumption that liberalism is a 
true but imperfectly developed insight into the real nature of 
the industrial revolution. I do not identify liberalism with the 
writings of Herbert Spencer or with the rulings of the Su- 
preme Court under the due-process clause. No one feels it 
necessary to identify the science of chemistry with every theory 
that Davy or Faraday propounded, and there is no more 
reason for identifying liberalism with all that liberals, or men 
who supposed they were liberals, have at one time or another 
promulgated as the gospel. They may very easily have been 
mistaken, and, in so far as what they regarded as liberalism has 
produced illiberal consequences, they surely were mistaken. 

They must have been mistaken wherever the conclusions 
they arrived at contradict their original insight and defeat their 
aims. Thus if liberal thinkers adopted a theory of free con- 
tracts which in fact results in arbitrary compulsion, then there 
was an error in their theory. If, with a view to promoting 
the free exchange of goods and services by contracts in open 
markets, they 'adopted a theory which sanctioned monopoly 
and necessitous bargains, their theory must in some important 
respect have been wrong. If they adopted a theory of private 
property which results in the destruction of the soil, wastes 
limited natural resources, or creates slums which impair the 
vitality of the people and degrade their lives, then their theory 
of private property must have been gravely defective. If, 
with a view to promoting the capitalistic mode of production, 
they adopted a theory of corporate rights which leads to the 
suppression of the market economy and the rise of collectivism 
in Big Business, then their theory of the corporation was, in 
some fundamental aspect, wrong. If they had a theory of the 
state which forces men to choose between anarchy and despot- 


ism, their theory of the state must have been wrong. If they 
had a theory of human rights which refused protection to many 
human interests, including those of posterity, then their theory 
of human rights was grossly inadequate. 

The development of the later liberalism led to all these 
self-defeating consequences, and the dogmatic temper of the 
later liberals prevented a thorough reexamination of their er- 
rors. But that reexamination is now under way by a new gen- 
eration of liberal thinkers, who have been shaken out of their 
complacency by the debacle of liberalism and out of the easy 
acceptance of the collectivist alternative by the horrors of the 
collectivist reaction. It is evident to them that mankind can- 
not stand pat with the aging Herbert Spencer or move on, ex- 
cept to its ruin, with the young men in their colored shirts. 



1. The Nature of the Problem 

IT would de beyond the scope of this book and of my own tech- 
nical competence to attempt a detailed reexamination of what 
in its decadence passed for liberalism on the subject of prop- 
erty, contract, the corporation, the state, and individual rights. 
But I shall venture to make a general reexamination of cer- 
tain fundamental ideas which must, I believe, be clarified, if 
liberalism is to be reborn. 

We may begin by recognizing that, as philosophers of the 
industrial revolution, liberal thinkers were greatly impressed 
with the need for the security of transactions and of property. 
If men are to exchange the products of specialized labor in 
distant markets, they must be able to count upon the delivery 
of what they have bargained for. They must be able to own 
things at a distance, when the things are out of sight, and to feel 
sure that the bird in the bush, if it is their bird, is as much 
theirs as if they had the bird in hand. When men have all 
their property in sight, and can defend it with their own 
strength, when they go to a near-by market and barter face to 
face with their near neighbors, there is no great need to empha- 
size the sanctity of contracts and the inviolability of property. 
The exchange economy, however, is Abased on credit, not merely 
in the narrow sense of loans, but in the broad sense that it relies 
upon the good faith of multitudes all over the world. 

In inaugurating this credit economy, the pioneers of liberal- 


ism had to overcome not merely the primitive incapacity of men 
to feel bound by distant and impersonal obligations, but the 
immemorial habits of the marauder and of the predatory state. 
The ordinary man was far from having acquired the habit of 
dealing faithfully with men who could not hold him to his 
promise. "Naturally," says Dean Pound, "contract loomed 
large in juristic thought" * during the seventeenth and eight- 
eenth centuries. Moreover, the highways were infested with 
brigands, the seas with pirates, and the world generally with 
sovereigns and local despots who looked upon merchants, par- 
ticularly those froth another locality, as their natural prey. 
From the year 1600 to about the year 1800, a great part of 
the efforts of progressive men went into establishing the 
elementary security which was indispensable to an exchange 
economy. They tamed kings by decapitating them. By 
waging wars against pirates and predatory governments they 
cleared the seas. They imposed respect for property and con- 
tract by what seems to us savage punishment of thieves and de- 
faulters; and they sought by every possible means to make 
business transactions secure. 8 

So conscious were the pioneer liberals of the need for security 
in the transactions by which men earned their living that they 
sought to make them completely inviolable, not only as against 
thieves and defaulters and mobs, but as against kings, parlia- 
ments, and state officials. Remembering the historic cir- 
cumstances, it is not difficult to appreciate the reasons which lee 
the liberals to embrace the theory that the rights of contrac 

1 Roicoe Pound, The Sprit of the Common Law, p. 94. 

"Thus by the nineteenth century the area of enforceable promises ha< 
been greatly extended. In the latter part of the eighteenth century, in 
deed, Lord Mansfield came very near establishing a doctrine that no promit 
in writing and no business promise should be nudum pactum." Nudur 
pactum is a doctrine of the Roman law that "an action does not arise froi 
mere agreement." Roicoe Pound, "Contract," Encyclopedia of the Sod 
Sciences, Vol. IV, p. 326. 


and of property were "natural" and, therefore, beyond human 
interference. The theory was what Georges Sorel has called a 
"vital lie," a useful fiction in dealing with the practical necessi- 
ties of a particular time. But though it. served a good purpose 
temporarily, it was an untruth, and only the truth can in the 
end prevail. The pioneer liberals did not really mean that 
property and contract were beyond the jurisdiction of the 
state. On the contrary, they meant that the authority of the 
state should be consecrated to the security of property and the 
enforcement of contract. 8 They developed their fiction at a 
time when the state did none of these things adequately; and so 
when the merchants and manufacturers obtained control of 
the state, they used the government to make property secure 
and to enforce contracts. They made the law the guarantor 
of the new social needs, and they called the guarantee a 
natural right. Thus, as Roscoe Pound has said, the legal 
rights of eighteenth-century Englishmen came down to us as 
the rights of man. 4 

The pioneer liberals convinced themselves that the legal 
rights enforceable in the courts were in essence superhuman. 
They taught that the laws merely declared inalienable and, 
therefore, unalterable rights with which men had been en- 
dowed by their Creator, that the kws were not laws formu- 
lated by legislators and judges and the custom of the com- 
munity, but were "the Laws of Nature and of Nature's God." 
By means of this great myth the pioneer liberals dissolved the 
ancient restrictions of caste and obstructed the interventions of 
authority. They used the myth to make possible the emergence 
of the new social order. But to their descendants they trans- 
mitted a collection of dogmas which obscured the problems of 
governments. For the legal rights which were actually en* 

8 Cf . John R. Commons's Legal Foundations of Cafitattsm. 



ism had to overcome not merely the primitive incapacity of men 
to feel bound by distant and impersonal obligations, but the 
immemorial habits of the marauder and of the predatory state. 
The ordinary man was far from having acquired the habit of 
dealing faithfully with men who could not hold him to his 
promise. "Naturally," says Dean Pound, "contract loomed 
large in juristic thought" 1 during the seventeenth and eight- 
eenth centuries. Moreover, the highways were infested with 
brigands, the seas with pirates, and the world generally with 
sovereigns and local despots who looked upon merchants, par- 
ticularly those from another locality, as their natural prey. 
From the year 1600 to about the year 1800, a great part of 
the efforts of progressive men went into establishing the 
elementary security which was indispensable to an exchange 
economy. They tamed kings by decapitating them. By 
waging wars against pirates and predatory governments they 
cleared the seas. They imposed respect for property and con- 
tract by what seems to us savage punishment of thieves and de- 
faulters; and they sought by every possible means to make 
business transactions secure. 9 

So conscious were the pioneer liberals of the need for security 
in the transactions by which men earned their living that they 
sought to make them completely inviolable, not only as against 
thieves and defaulters and mobs, but as against kings, parlia- 
ments, and state officials. Remembering the historic cir- 
cumstances, it is not difficult to appreciate the reasons which led 
the liberals to embrace the theory that the rights of contract 

1 Roscoe Pound, The Spirit of the Common Law, p. 94. 

""Thus by the nineteenth century the area of enforceable promises had 
been greatly extended. In the latter part of the eighteenth century, in- 
deed, Lord Mansfield came very near establishing a doctrine that no promise 
in writing and no business promise should be nudum pactum." Nudum 
pactum is a doctrine of the Roman law that "an action does not arise from 
mere agreement." Roscoe Pound, "Contract," Encyclopedia of the Social 
Sciences, Vol. IV, p. 326. 


and of property were "natural" and, therefore, beyond human 
interference. The theory was what Georges Sorel has called a 
"yital lie," a useful fiction in dealing with the practical necessi- 
ties of a particular time. But though it served a good purpose 
temporarily, it was an untruth, and only the truth can in the 
end prevail. The pioneer liberals did not really mean that 
property and contract were beyond the jurisdiction of the 
state. On the contrary, they meant that the authority of the 
state should be consecrated to the security of property and the 
enforcement of contract. 8 They developed their fiction at a 
time when the state did none of these things adequately; and so 
when the merchants and manufacturers obtained control of 
the state, they used the government to make property secure 
and to enforce contracts. They made the law the guarantor 
of the new social needs, and they called the guarantee a 
natural right. Thus, as Roscoe Pound has said, the legal 
rights of eighteenth-century Englishmen came down to us as 
the rights of man. 4 

The pioneer liberals convinced themselves that the legal 
rights enforceable in the courts were in essence superhuman. 
They taught that the laws merely declared inalienable and, 
therefore, unalterable rights with which men had been en- 
dowed by their Creator, that the laws were not laws formu- 
lated by legislators and judges and the custom of the com- 
munity, but were "the Laws of Nature and of Nature's God." 
By means of this great myth the pioneer liberals dissolved the 
ancient restrictions of caste and obstructed the interventions of 
authority. They used the myth to make possible the emergence 
of the new social order. But to their descendants they trans- 
mitted a collection of dogmas which obscured the problems o 
governments. For the legal rights which were actually en- 

8 Cf. John R. Commons's Legal Foundation* of Capitalism. 



f orceablc in the courts were not in fact the Laws of Nature and 
of Nature's God. It was difficult to argue that there was a 
Law of Nature which required the eldest son to inherit all of 
his father's property, or made it the unalterable rule of human 
societies that the bankrupt should go to jail. 

By placing legal rights on a superhuman foundation, the 
inquiry into the justice, the suitability, and the social con- 
venience of laws was inhibited. The effort to adapt the laws 
to the dynamic economy was driven underground and out of 
sight. It was removed from the realm of scientific inquiry 
and rational debate. Thus the convenient myth of the pioneer 
liberals became the dogmatic fundamentalism of the latter- 
day liberals, and, in the guise of loyalty to unalterable prin- 
ciples, legislatures and courts shaped the laws to meet the 
pressures of interested groups. Jn their theory the law was 
already completed: but, in fact, the need for new law was 
brought home to them by popular agitation, by legislative 
lobbying, by the impressive briefs of the lawyers. They met 
the new need by improvisations, and reconciled the new laws 
with the unalterable law by employing an elaborate legal 

Only by recognizing that legal rights are declared and en- 
forced by the state is it possible to make a rational examination 
of the value of any particular right. The latter-day liberals 
did not see this. They fell into a deep and confusing error 
when they failed to see that property, contracts, corporations, as 
well as governments, electorates, and courts, are creatures of 
law, and have no existence except as bundles of enforceable 
rights and duties. A judge is only a man whose writs are 
effective and whose judgments are obeyed; if the writ is not 
respected, the man is not really a judge in that cause. A voter 
is a person who is entitled to cast a ballot which has certain 
specified consequences; to cast a vote if nobody has to pay any 


attention to the vote is to cast a straw vote. A corporation is 
an association of persons who have rights and duties which 
they would not have if they were not incorporated. A contract 
is an agreement which the courts will enforce} an agreement 
which the courts will not enforce, say that John Smith is to jump 
over the moon, is not a contract. Property is a varying col- 
lection of enforceable rights to use in certain ways some of the 
things that are not provided in unlimited quantity and without 
effort. Thus the purse which the thief has just stolen is not 
his property; for if another thief steals it, the first thief cannot 
persuade a court to return it to him. 

Property is an extremely intricate and subtly differentiated 
complex of rights. Landed property in the heart of New 
York City does not, for example, include the right to raise pigs 
on it In some states landed property includes the ownership 
of everything down to the centre of the earth; in others the 
landlord does not own the fninerals that lie just under the sur- 
face. Until recently it was supposed that the landlord owned 
the air above him to the top of the sky. Now he owns it only 
up to the level where, by law, airplanes are permitted to fly. 
In some places a man's eldest son must inherit all his property, 
in others it must be equally divided among his children} in some 
he can designate his heirs, in others the law designates his heirs } 
in almost all modern communities, the government takes some 
considerable part of the inheritance. 

It follows that these complicated and variable rights which 
are the substance of property and contract are not only es- 
tablished by the law that the state recognizes, but that they may 
be, and that from time to time they must be, modified by the 

The problem that perplexed the liberals arose from the fact 
that they had very good reason for feeling that nobody no 
king, no parliament, no collection of voters, and no judge was 


good enough or wise enough to be trusted with the authority 
to modify the rights upon which the security of property and 
of transactions and of the person depended. This is the 
fundamental problem of the constitution of the liberal state, 
and, though we have about three hundred years of experience 
behind us, the problem is as yet only partially understood and 
imperfectly solved. 

2. The Ultimate Power of the People 

The development of constitutional theory for the liberal 
state began in England during the seventeenth century, 
although continental thinkers, such as Grotius, contributed 
greatly to it England was the first large Country to ex- 
perience the industrial revolution} it was in England, therefore, 
that the need to adapt the social order to the new economy first 
became urgent. 

But, though the debt of mankind to the English pioneer 
liberals is immeasurable, the historic circumstances in which 
English liberalism was formulated have tended to obscure 
the real issues for later epochs. What the English did was 
to adapt a feudal monarchy to the modern social economy, 
and their method was to convert "the feudal duties of the 
paramount lord toward his tenants into legal duties of the king 
toward his subjects." * In the course of their struggle against 
the Stuart kings, the English developed the conviction that 
the essential principle of a free government was to impose 
fundamental limitations upon the state and its rulers, that, 
as Chief Justice Coke told James I during their historic con- 
ference in 1612, the King is "under God and the law." * 

9 Pound, of. tit., p. 88. 

* Coke was quoting Bracton. Cf. Pound and Plucknett's Readings on the 
History mU System of the Common Lam. Third edition, pp. 18 5-8 7. 


In this struggle against the prerogatives of an absolute king 
the theory of our liberties was forged. It is an incomplete 
theory. While we have learned from the English experience 
the great principle that the officials -of the state must have 
limited powers defined in a law which is above them, the 
theory does not disclose how the supreme kw itself is to be 
adapted to changing circumstances and new moral stand- 

For a variety of reasons the British people did not have to 
face that question during the formative period of modern 
liberalism. They achieved a reasonably workable compromise 
in their special circumstances} they had a Parliament elected 
until recently by a limited franchise, and hedged in by an en- 
lightened aristocracy, a civil service with strong traditions, and 
the deeply settled respect for the common law. Thus for a long 
time the balance of forces within British society maintained an 
equilibrium between security and change, between the suprem- 
acy of the established law and the emerging supremacy of 
the populace. But the fictions and compromises of the British 
system were effective only in the relatively homogeneous 
portions of the British Isles. They did not work at all in 
Ireland or very well in the rest of the British commonwealth, 
and in order to maintain their empire, and perhaps even to 
preserve a liberal state at home, the British are now at last 
being compelled to consider the basic problem of constitutional 

It was this problem that the American Revolutionists had 
to face over a hundred and fifty years ago. They had dis- 
owned the monarchy and the whole aristocratic structure of the 
British state. They had no choice. There was nothing left 
but the irresistible -power of the mass of men. What the 
American Revolutionists did with the constitutional problem is, 
therefore, incomparably the most significant political experi- 


ment undertaken in modern times. Fortunately, they hap- 
pened to be men of extraordinary political genius, and they 
were able to discern, though they dici not solve completely, the 
fundamental political problem of a liberal society. 

Their epoch-making contribution to the modern science of 
government lay in the discovery of the distinction between 
the people and the state. As inheritors of the English tradi- 
tion, they were prepared for the discovery by the long struggle, 
going back to the Norman Conquest, between the common law 
of the people and the prerogatives of the king. In the English 
tradition it was assumed that the people limited the power of 
their king, and not that the people ruled the state. For the 
American Revolutionists the situation was reversed: the people 
were in power when the Constitutional Convention met. No 
one had lawful or effective authority which could prevail over 
the local governments and the direct action of lawless groups. 
So the task of the Americans was to organize popular rule, and 
not, as in England, to check the power of the king. 

Their discovery of the distinction between the people and 
the state was based not on hope, belief, or a doctrine, but on an 
observable fact. The ultimate power was in the hands of the 
people, and if there was to be a state it had to operate through 
powers delegated to it by the people that is to say, by con- 
sent of the governed. In recognizing this fact and formulating 
it as a theory of government, the Americans between 1776 and 
1789 made a contribution to the science of government which 
is the necessary premise of all political thinking in the modern 
world. Once -the ancient order of habitual obedience in a caste 
society has dissolved, the power to rule is the formless power 
of the mass of the population. That power has always been 
potentially stronger than any government: the most absolute 
despot does not rule by virtue of his own strength but only by 
the loyalty of his guards and the servility of his subjects. It 


is not until the habit of subjection has been dissolved that the 
latent power of the people becomes a manifest and undeniable 
fact It became manifest in the popular uprising which began 
in America in 1776 and spread to France. Though attempts 
were made after that to reassert the principle of legitimacy, they 
were vain. At the beginning of the nineteenth century all 
men who did not wish to deceive themselves understood that 
any government, despotic or liberal, is an organization of power 
drawn out of the reservoir of popular force/ 

In the rather confused writings of the totalitarian philoso- 
phers this fact is sometimes denied. But in practice even 
they must acknowledge it. They deny it when they assert that 
the people and the ruling officials are one and the same, and 
when they pretend that the will of the dictator is simply the 
will of his people. But they acknowledge the difference be- 
tween the people and the state when they set up concentration 
camps and ministries of propaganda. These instruments of 
deception and repression would not be needed if the rulers did 
not have to compel the assent of the people to the authority 
they have usurped. So we may say that since the revolutions 
of the eighteenth century, all governments have known that 
they rest on the consent of the governed. The ruling official- 
dom has known that it will fall when the troops refuse to 
march and the people rise up and rebel} and that somehow or 
other, by hook or crook, all governments must obtain the con- 
sent of the people. Whether the officials obtain it by cajoling 
half the people into terrorizing the rest, or whether they obtain 
it surreptitiously by manufacturing opinion, or openly by dis- 
cussion and debate, the fact remains that the state is not the 
people but that it derives its power from the people. 

Having made this scientific discovery, the authors of the 
American Constitution undertook to organize a state in which 

7 .Cf. Jose Ortega y Gasset's The Record of the Masses. (London; G forge 
Allen & Vnwin Ltd.) 


this gross and formless power of the people would, as James 
Madison put it, be "refined." For, of course, they did not 
fall into the error of supposing that the unorganized popukce 
knew how to rule* They had recognized that the popukce 
had the power to rule. They had acknowledged that it had 
the right to rule. They then knew that the problem was to 
enable the populace to rule. Undoubtedly that is what Madi- 
son had in mind when he spoke of the need for refining the 
will of the people. 

The devices which the Constitutional Convention adopted 
to achieve this end are well known. They are the checks and 
balances of the American Constitution. Whether these me- 
chanical arrangements were the best possible is not the ques- 
tion here. The point is that the authors of the Constitution 
conceived of the people as subjecting themselves to a legal 
system in which their power to rule was carefully organized. 
They defined in specific terms the manner in which the people 
should rule. This is the great conception of the American Con- 
stitution. It recognizes the irresistible power of the people 
as a fact, and acknowledges that power as the ultimate source of 
all authority. Then it raises the question of how this formless 
power can be organized for good government. The Constitu- 
tion does not have the only possible answer to this question, 
nor a wholly satisfactory answer. For the mechanical checks 
and balances have many inconveniences. But the question 
which the Constitution seeks to answer is absolutely funda- 
mental and cannot be evaded. 

The authors of the Constitution themselves were by no 
means convinced that they had found the answer, and their 
contemporaries were even less certain. So deeply impressed 
were they all with the dangers of arbitrary government that 
they felt the need of additional guaranties. So to the basic 
conception of the Constitution, which is that the people must 


rule but that their will must be refined, there was added a Bill 
of Rights which was intended to limit drastically the scope of 
government action. Yet the Bill of Rights was not really 
inconsistent with the original conception of popular rule. For 
it could be amended or repealed. It simply provided that 
certain essential liberties could not be impaired except by 
virtually the whole people after prolonged examination. Thus 
the Bill of Rights merely adds some more powerful checks and 
balances for refining the popular will. 

3. Representation of the Peofle 

One of the hallmarks of genius, someone has said, is the 
faculty -for asking the right questions. The leaders of the 
American Revolution proved their genius by going straight 
to the heart of the question to which any modern society must 
find the answer or perish. For as the progress of the indus- 
trial revolution destroys legitimacy, prescription, and habitual 
obedience to established authority, the fundamental ques- 
tion is how the formless power of the masses shall be organ- 
ized, represented, and led. In the generation after the Revo- 
lutionary War, the American leaders faced this question. It 
is an even more urgent question to-day than it was a hundred 
and fifty years ago. 

For in the interval the acids of modernity have dissolved, 
more thoroughly than the constitutional Fathers could have 
anticipated, the psychological bonds of the ancestral order.* 
Since their time virtually the whole traditional social organ- 
ization of Europe has decayed or has been uprooted, and even 
in the very depths of Asia and Africa the mass of men have 
begun to assert their power. The question which the Amer- 
ican founders raised was how the inchoate mass of the people, 

1 Cf. A Preface to Morals, Part I, Ch. IV. (Undtn: Getrge Alien & 
Unwin Ltd.) 


as they assert their power, could be organized into a civil 

So, as in previous ages men had studied the personal history 
of kings, they studied the biography of the masses. From 
books and from their own observation they had learned that 
unless the people are successfully organized in a state, so they 
can act through officials who represent them under laws to which 
they have consented, the people's power is mere ineffective, 
self-destroying violence. Without civil organization the people 
are at one time a helpless crowd, at another a horde trampling 
all before them} then they are mobs which destroy each other ; 
then isolated individuals, each man against all the others in a 
life that is "solitary, poor, hasty, brutish, and short"} 9 until 
again, in the cycle of their impotent violence, they become a 
horde led by a master of the crowd. 

It has been said that the authors of the Constitution were 
not democrats, and their warnings against the irrational power 
of the formless mass are cited as evidence. But to credit this 
is to misunderstand their genius. They did not identify the 
power of the masses with democracy. They were able to see 
that the essential problem is to organize this power of the 
masses so that it may function as a democracy. That is why 
they made a lasting contribution to political thought and 
made so great a mark on the history of mankind. Had 
they been "democrats" in the sense which their confused 
critics have in mind, the ensuing turmoil and impotence would 
have made America, not the land of promise, but a gigantic 

The American founders saw that the problem was no 
longer what it had been under the Stuart kings against whom 
their ancestors had rebelled: to obtain protection for the com- 

'Thomas Hobbes, Leviathan, Ch. XIII, "Of the Natural Condition of 
Mankind as concerning their Felicity and Misery*" 


mon man as against his masters. In their time the common 
man already had the power of his former masters} the cap- 
tains and the kings had departed. Their problem was how 
to organize the indubitable and inalienable power of the mass 
in order that it might achieve its own best interests. And 
since it was obvious that no mass of men can as a mass make 
more than the simplest decisions of yes and no/ and is physi- 
cally incapable of administering its affairs, the practical ques- 
tion was how a government could be made to represent the 

It was here that the founders set themselves apart forever 
from the nai've theorists of democracy. They saw, in Burke's 
phrase, that the constitution of a state is not a "problem of 
arithmetic." So they refused to identify the will of the people 
with the transient plurality of the voters in one constituency. 
They did not say, for example, that if the whole mass of per- 
sons votes once, and if one party has 34 per cent of the votes 
and the other two have 33 per cent each, the winner in the 
contest is the true representative of the people. They thought 
of "the people" as having many dimensions in space, in time, 
in weight, in quality. They thought, as Burke did, that a 
society is "a partnership in all science j a partnership in all artj 
a partnership in every virtue, apd in all perfection," and "as 
the ends of such a partnership cannot be obtained in many 
generations," a civil society is "a partnership not only between 
those who are living, but between those who are living, those 
who are dead, and those who are to be born." u The Amer- 
ican founders sought to represent this many-sided people and 
they thought of the people's will as an equilibrium of its many 

And so in their practical arrangement they sought to make 

10 Cf. my Phantom Public. 

11 Burke, "Reflections," of. cit.> pp. 368-69. 


the government as nearly representative as possible of the 
many facets of the popular will, of the people acting as citi- 
zens of local communities, acting as citizens of regions, of 
states, of the nation, acting with remembrance of the past, acting 
as they felt at the moment, acting as they would feel after fuller 
consideration. For they gave no credence to the idea that 
one periodic count of heads could elicit the real will of a large 

The founders sought to approximate a true representation 
of the people by providing many different ways of counting 
heads. For the national government, itself a federation of 
states with complex forms of representation, they provided a 
House elected for two years from fairly small constituencies 
of equal size; a Senate in which one third only was elected 
every two years from the states that is, from constituencies 
of varying size; a President, chosen, as they conceived it, by 
electors from the separate states, and for a term of four years, 
which did not correspond with that of any one group of the 
legislators; a judiciary appointed for life after confirmation by 
the Senate. Thus no two branches of the government were 
chosen by the same constituency or for the same term of of- 

They provided that for ordinary laws a majority of both 
Houses and the President must concur, that a two-thirds ma- 
jority may prevail over the President, that for treaties two 
thirds of the Senate must concur with the President. They 
then provided that all the powers exercised by the legislative 
and the executive branch were subject to the supreme law of 
the land, and that their specific acts would be invalid if con- 
trary to the Constitution. They provided that the supreme 
law of the Constitution could be amended only by a com- 
plex vote which would ensure as nearly as possible that the 
decision had been fully considered, that all men had had a 


chance to hear the issues debated, and that many more than 
a mere majority had been convinced. 

How different is this conscientious attempt to ascertain 
the true will of the people from the cynical plebiscites con- 
ducted by dictators, where there is no choice, no opportunity 
to discuss the issues, and where the momentary, manufactured, 
majority opinion is treated as the will of the nation. Yet 
what the dictators do cynically, many who think themselves 
democrats would do naively: they would identify the will of 
the transient majority with the people, and stake everything 
on its decisions. The logic of their ideal would call for the 
election of all officials in one universal ballot empowering these 
officials to do anything they chose as long as they were in 
office. If the naive democrats had the full courage of their 
convictions, they Would break down all the complex and dif- 
ferentiated forms of representation and would remove all legal 
restraint upon the power of the representatives. This is 
sometimes described as pure democracy. But a little reflection 
will show that it emasculates the sovereignty of the people; 
for if the supreme lawmaking power is entrusted to the repre- 
sentatives of a transient majority, they can at any time dis- 
franchis? not only the minority but the majority as well, and 
confirm themselves permanently in the seats of authority. A 
"pure" democracy, as the American Founders saw so propheti- 
cally, is really brute, inchoate democracy, and the certain 
foundation of absolutism. 

No doubt it is true that the mechanical devices of the Amer- 
ican political system are defective, and could be improved. 
Much more pertinently it may be said that all mechanical de- 
vices are necessarily inadequate to ensure true representation, 
and presently we must explore what I believe is the unrecog- 
nized corollary of popular rule. But before we come to that 
we must appreciate fully the deep wisdom of the original Con- 


stitution in its demonstration that the will of a people can 
only be refined and ascertained by a complex system of repre- 
sentation differentiated in time and space* The devices were 
only the means and have no universal importance: but the 
end, to which they were the means, has far greater importance 
to-day than when the Founders first discerned it. 

Its importance will increase. For with literacy general 
in the whole population, with inventions for communicat- 
ing instantaneously with the population of the entire earth, 
a political system that will refine, rather than respond abjectly 
to, manufactured mass opinion is more thaji ever indispensable. 
The Founders of the American Republic realized that the 
demagogue is not a romantic fellow who appears now and 
then, but that he appears whenever government is not ef- 
fectively representative. Demagoguery is the falsification 
of representative government, the cultivation of the transient 
and apparent rather than of the considered and real will of the 
people. James Madison would not have been astonished at 
Hitler. He had studied carefully the classical demagogues. 
That is why the Constitutional Convention attempted to set 
up truly representative government j in order to protect the 
masses from the hypnosis of the moment, they invented de- 
vices for balancing the constituencies and delaying their de- 
cisions. They sought to make the people safe for democracy. 
What they meant to do every civilized people has to do, and 
if the checks and balances of the American Constitution are 
now antiquated, others will have to be devised to replace 

4. Distrust of the People 

Yet since the beginning of the American experiment there 
has existed always a feeling that the will of the people could 


not be refined successfully enough. Men have felt that some- 
thing more was needed than mechanical checks and balances 
designed to "elicit a truly representative public opinion. For 
after all the mass itself might become so thoroughly indoc- 
trinated with false ideas that it would, despite all the safeguards 
of debate, will the destruction of its own vital interests. At 
the outset, therefore, men insisted upon a Bill of Rights which 
would protect, as against mass action, their vital interests as 
individuals and as members of historic communities. After 
the Civil War they supplemented the Bill of Rights with a 
view to protecting the vital interests of the enfranchised Negro 
and of all other individuals against mass action in the states. 
And later they consented to a judicial interpretation of these 
individual rights which extended protection to the property 
not only of individuals but of corporations. 

Thus in the course of time the checks and balances were re- 
enforced by dogmatic inhibitions. American jurisprudence 
and political theory adopted the idea of a supreme law more 
absolute than the Constitution itself. This super-law was 
never enacted. It was customary law which judges, lawyers, 
lawmakers, and publicists developed and imposed through 
judicial opinion and executive veto and legislative obstruc- 
tion. In the case of Fletcher v. Peck, a statute of Georgia was 
set aside by Chief Justice Marshall, not because it violated 
particular provisions in the Federal Constitution, but because 
it was contrary to the "general principles which are common to 
our institutions." " This was the beginning of that supreme, 
yet unenacted, law above the Constitution itself which caused 
Mr. Justice Holmes to protest that the Fourteenth Amend- 
ment did not enact Herbert Spencer's Social Statics, and has in 
our own day caused a collision between the courts and popular 

M Pound, of. dt., p. 97. 


It was in the second half of the nineteenth century that Amer- 
ican jurists in their efforts to adapt the enacted laws to chang- 
ing circumstances found and enforced the details of this supreme 
law, and set it up as a barrier to the people's will. These law- 
yers came "very close to a judicial assertion of legislative in- 
competence to deal with ordinary legal relations."" In a 
series of decisions the judges circumscribed the power of the 
states to regulate corporate bodies which the states had cre- 
ated, to control the franchises of monopolies which the states 
had granted, to set the terms of the contracts which the states 
had to enforce. 14 

These judicial inhibitions upon the legislature were not de- 
rived from the plain language of the Constitution. No one 
reading the Fourteenth Amendment, for example, and remem- 
bering that it was designed to protect the personal rights of the 
newly emancipated Negro, would reach the conclusion that 
the reference to due process of law meant that a corporation 
was a person and that the states could not freely fix the terms 
on which these legal creatures could do business. This super- 
law was not ordained by that "refined" popular will which 
the original Constitution recognized as the sovereign power. 
It was supposed to be the law which all civilized men recognize 
as the obligation to deal justly with one another. In fact 
it was merely the status quo. This super-law, disguised as 
the higher law, was made by judges and lawyers who ap- 
proved of the current purposes of the promoters of the cor- 
porate form of business enterprise; they chose to regard ex- 
isting, historic property rights as the reflection of supreme 

"Pound, of. cit., p. 107. 

14 Cf. Walton H. Hamilton's "Freedom of Contract," in Encyckfidia of 
th* Social Sciences, Vol. VI, p. 450. Robert . Cushman's "Due Procen of 
Law, ibid., Vol. V, p. 264. Abo Pound's "Contract," ibid., VoL IV, p. 323. 


kw based on absolute reason) valid everywhere and always. 18 
And so into the development of the liberal American state 
there was introduced the contradiction between popular sover- 
eignty and the dogmatic absolutism of this counterfeit natural 
law which the judges made and then found. As the issues 
were raised in practice, the two notions were irreconcilable. 
For if the people have the right to exercise the power which 
in fact they possess, the highest law of the state must be the 
law which the people declare. The latter-day liberals had lost 
their understanding of the great political discovery which in- 
spired the original Constitution. Instead of recognizing that 
the will of the people must prevail, and that the function of a 
constitution is to refine that will, they sought to set up judicial 
dogma which inhibited the popular will. They reenforced 
the dogmas by appealing to the piety of the people., their rev- 
erence for the Constitution, and their respect for the courts. 
The latter-day liberals sought to obstruct, rather than to re- 
fine, the popular will. And in that enterprise they found 
themselves in some very bad company, protecting many preda- 
tory and antisocial interests. 

This deep contradiction has provoked a conflict between 
the mass of the electorate seeking to assert their power and 
the beneficiaries of the dogma who seek to restrain the people's 
power. It is a dangerous . conflict. For it jeopardizes not 
only the rights of property and the security of transactions 

15 The views of these jurists "were confirmed by the teachings of the 
classical economists and by the individualistic social theory of Herbert Spen- 
cer and of a William Graham Sumner who had not yet discovered the 
folkways. They had begun the reading of law with Blackstone's Commen- 
taries, in which the individual is the hero and the state the villain in the 
piece; sampled Coke's Second Institute, which was a by-product of revolt 
against authority; learned from Cooley the constitutional limitations upon 
government; and shared Maine's discovery of the cultural significance of the 
replacement of status by contract." Hamilton, of. cit. 


but the popular sovereignty as well, The effect of persistent 
obstruction to the popular will is not to refine it but to degrade 
and to brutalize it. When at last the popular will prevails, 
it is capable of overthrowing the vested rights of property j 
but it is incapable of exercising any rights of its own. The 
momentum of the rebellious mass, if dammed up at the ob- 
struction, will finally overwhelm the obstruction and become 
an inchoate power. In breaking down the intolerable ob- 
struction to the popular will, the defenses of all individual 
rights will collapse, and out of the common ruin of property 
and democracy a collectivist dictatorship will in all probability 

Thus the latter-day liberals fell into a tragic error when 
they failed to hold fast to the original insight of the Constitu- 
tion: that it is upon the refinement of the popular will that 
a progressive society must depend. In an unchanging world 
where men are habituated to a definite status, the status quo 
persists. Under such circumstances absolute dogmas merely 
make men feel that it is reasonable to do what they would 
never think of not doing. But after the industrial revolution 
and the political and social revolutions which it caused, the 
only conceivable source of authority is the power of the people 
and the only hope of good government is the progressive re- 
finement of the people's will. 

5. Social Control by the People 

We shall, however, misunderstand the real problem if we 
do not fully appreciate the fact that the American faith in de- 
mocracy has always been accompanied by efforts to limit the 
action of the democracy. Distrust of popular rule has by no 
means been confined to the well-to-do. It has been general 
and continuous. At one time men fighting for liberty of 


conscience have defied the enacted will of the people; at an- 
other men defending the privileges of business corporations 
have sought to circumvent it. In our own day, for example, 
the very same men who have defied the will of the people 
when it imposed national prohibition, outlawed revolutionists, 
censored books and the stage, prohibited the teaching of methods 
of birth control are enthusiasts for the national regulation, the 
more authoritative the better, of all phases of economic ac- 
tivity. The Democratic Party, which was the habitual de- 
fender of the sovereignty of the separate states, is to-day the 
advocate of a centralized nationalism which would have aston- 
ished Alexander Hamilton and John Marshall. Most of us 
are for the people when we think the people are for us, and 
against them when they are not. The Republicans, hav- 
ing for fifty years after the Civil War countenanced the im- 
pairment of state sovereignty under the due-process clause of 
the Fourteenth Amendment, had by 1936 become the ardent 
disciples of Thomas Jefferson and James Madison. It is evi- 
dent that the American people as a whole have never consis- 
tently believed that all their interests could be placed unre- 
servedly at the disposal of the people, however refined the 
-representation, however conscientiously the people's will was 
checked and balanced. 

They have not believed whole-heartedly that democracy 
was safe for the world. This unbelief is, I believe, an intui- 
tion that there is something lacking in the theory of democracy, 
that somewhere the doctrine of popular sovereignty as con- 
ceived by its apostles is inconsistent with essential facts of 
human experience. Popular government has not worked out 
as promised, and all through the nineteenth century democrats 
speculated on the reasons for their disappointment. 

They had various answers to the riddle: if they were im- 
pressed with the evils of demagoguery, they said that in the 


long run popular education was the remedy and that the su- 
premacy of a static law was the immediate defense. If they 
were impressed with the evils of plutocracy and of political 
corruption, they said that the cure for the evils of democracy 
was more democracy. They have tried all the remedies. 
They have spent immense sums on education. They have 
developed a popular press which is by and large the most in- 
formative in the world. They have also developed a technic 
of propaganda which was, until the totalitarian states put their 
minds to it, the most effective in all history. They have 
elaborated judicial restraint to a remarkable degree. And 
they have widened the electoral franchise and greatly facili- 
tated the direct election of their officials. 

Though I regard the American passion for education as 
noble, and the technic of propaganda as pernicious, the super- 
constitutional law of the judges as untenable, and so-called 
"pure" democracy as a mistake, I mention these diverse things 
together at this point in the argument because they are all 
evidences of the same thing: the intuitive conviction of the 
people that democracy will not work merely by making it accu- 
rately representative. 

The propaganda, the pressure groups, the formulation of a 
kw that is higher than the Constitution, and the breaking 
down of the checks and balances are evidences, it seems to me, 
of a radical defect in the conception of democracy. Thus the 
reliance upon education, in the sense of schools, and lectures 
for adults and popularized knowledge in books and magazines, 
is, it seems to me, merely begging the question. It is true, of 
course, that a people thoroughly educated in mind and char-* 
acter would find the answers to their problems. But it is a 
mere truism. For the question is how a democracy is to be- 
come so well educated, and we may be sure, I think, that the 
necessary education for popular government cannot be ob- 


tained in the schools and colleges, from books, newspapers, 
lectures, and the radio, alone. Popular education is indis- 
pensable, and I should be the last to decry it But it is 

The kind of self-education which a self-governing people 
must obtain can be had only through its daily experiences. In 
other words, a democracy must have a way of life which edu- 
cates the people for the democratic way of life. The pioneers 
of democracy, particularly in America, dimly apprehended but 
never, I think, fully comprehended this truth. They had made 
the great discovery that henceforth the people would rule, that 
they have the right to rule, and that the government through 
which they rule must be made truly representative. But what 
they did not master was the corollary of their discovery: that 
if the people do rule, they must rule in a particular way. 1 
am not suggesting that they were altogether oblivious of the 
question: it would perhaps be accurate to say that they took 
the answer for granted and did not examine it. 

For during the formative period of Democratic ideas, the 
assumption was general that any good government would re- 
main consistent with the spirit of the English common law. 
The early democrats did not, it would seem, expect the people 
to legislate much or to legislate radically. So they did not 
recognize the urgency of the problem which arose later when 
radically new legislation was needed and desired. As a con- 
sequence they handed down to us a conception of democracy 
which is deeply discerning about the importance of truly repre- 
sentative government, but is without guiding principles as to 
how the people shall legislate. 

The lack of these guiding principles hag caused the pro- 
foundest confusion. For in the absence of a well-defined con- 
ception of how a democracy shall govern, the sovereign people 
simply took to themselves the attributes of the kings whom 


they had deposed. It was supposed that the powers of the 
monarchy had-passed to the people, that every man, as Senator 
Huey Long put it, was a king. "All that was necessary," 
says Duguit, "was to substitute the nation for the king. The 
king was a person, a subject of right, the holder of sovereign 
power} like him, the nation will be a person, a subject of right, 
the holder of sovereign power." 16 Since the theorists of de- 
mocracy had not come to grips with the problem of how the 
people can rule, they thought of the people as the inheritors 
of the kingly power. 17 They did not fully appreciate the radi- 
cal nature of the revolution in which they were engaged, and 
so they failed to realize that when the people rule they must 
rule in a radically different manner than a king. 

When the people's representatives have sought to govern 
as if they had inherited the royal prerogatives, they soon pro- 
duced the same evils which men had complained about under 
royal government. Officialdom aggrandized itself and es- 
caped accountability. It became corrupt, arbitrary, exacting, 
inefficient, parasitical, irresolute, and insensitive. Instead of 
hereditary rulers, there were political machines self-perpetuated 
at the expense of the taxpayers; instead of courtiers there were 
place hunters. For the social order needed adjustment to 
the progressive economy. The representatives of the people 
had to legislate. Having no clear conception of how a democ- 
racy can legislate appropriately, they drew upon the ideas 
which they had inherited from the kings. They aggrandized 
the number and power of public officials. 

16 Leon Duguit, Law in the Modern State, p. 11. Tranilated by Frida 
and Harold Laski. (London: George Allen &* Untuin Ltd.) 

"Cf. Otto Gierke's Political Tfoorits of th* MMl* Ag*, p. 92: "And 
ao they came to the opinion that in every state some one risible Ruler, a man 
or a ruling assembly, is the 'Subject' of a Sovereign Power over the Ruled. 
And then, when . . . men developed the theory of a Popular Sovereignty, 
. . . transferred it [i.e., the Ruler's Sovereignty] to an Assembly which 
represents the People." 


The effect was to cause confusion and disappointment in 
democratic societies. Those who saw the need of reform, or 
hoped to profit by it, knew no way of achieving reform except 
by inflating the executive and the administrative branches of 
the government; those whose interests were threatened, as well 
as those who remembered the experience of the past, resisted 
reform by pointing to the perils of a powerful, ubiquitous, and 
self-perpetuating bureaucracy. Reformers justified the re- 
turn to an authoritarian state by the fiction that the state now 
belonged to the people: as a matter of fact, the official state 
has grown so large that the legislature has only the vaguest idea 
of what the officials are doing, and is wholly incapable of hold- 
ing them to account. Conservatives justified their resistance 
by appealing to the indubitable lessons of history, that the ag- 
grandized state becomes eventually a tyranny tempered only 
by its incompetence. Reformers made the unanswerable ar- 
gument that the laws must change in a progressive economy, and 
the conservatives retorted that the remedy was worse than the 
disease. The reformers exalted the rights of the state, the 
conservatives the rights of the individual: the one doctrine 
became collectivism, which ends in militarized despotism, and 
the other doctrine became laissez-faire, which meant at last that 
no one must do anything. 

But this is a false issue. For it is not necessary to choose 
between social control administered by the aggrandized state 
and a self-assertive individualism subject to no social control. 
That supposedly exclusive choice, which causes such furious 
party antagonism in our society, overlooks entirely one of the 
oldest, best established, and most successful methods of social 
control in human experience. It is social control, not by au- 
thority from above commanding this man to do this and that 
man to do that, but social control by a common law which 
defines the reciprocal rights and duties of persons and invites 


them to enforce the law .by proving their case in a court of 

This method of social control is, I submit, the appropriate 
method for a self-governing people to use. The pioneers of 
liberalism fought successfully to vindicate this method of social 
control as against the prerogatives of the king. From the early 
days of the Norman Conquest they stood for the common law as 
against the commands from the king on high. 11 This method 
of social control the founders of the American Constitution took 
for granted, like the air they breathed. So much did they 
take it for granted that they neglected to define it and fix it in 
the tradition of democracy. But in the debacle of liberalism 
during the delusion of laissez-faire, this method of social con- 
trol was unappreciated and then forgotten. The reformers 
forgot it when they multiplied officials instead of revising the 
rules of the game; the conservatives forgot it when, in effect, 
they announced that the existing rules were immutable. 

6. The Passage to Political Maturity 

Truly conceived, a democracy is not the government of a 
people by elected representatives exercising the prerogatives 
of their former lords and masters. It is the government of the 
people by a common law which defines the reciprocal rights 
and duties of persons. This common law is defined, applied, 
and amended by the representatives of the people. 

Merely to enfranchise the voters, even to give them a true 
representation, will not in itself establish self-government: it 
may just as well lead, and in most countries has in fact led, to 

M For two centuries after the Conquest, "Parliament was occupied only 
with laws recognizing the Anglo-Saxon laws previously existing, or laws re- 
moving abuses of the royal power; and the desire of the king to tax the people 
was used as the lever to get him to assent to these laws." Frederic Jesup 
Stimton, Pofuhr Law-mating, p. 24. 


a new form of absolute state, a self-perpetuating oligarchy and 
an incontrollable bureaucracy which governs by courting, ca- 
joling, corrupting, and coercing the sovereign bat incompetent 
people. For the people cannot govern by entrusting their 
representatives with the prerogatives of the king* They can 
govern only when they understand how a democracy can gov- 
ern itself j when they have realized that it cannot govern by 
issuing commands; that it can govern only by appointing repre- 
sentatives to adjudicate, enforce, and revise laws which de- 
clare the rights, duties, privileges, and immunities of per- 
sons, associations, communities, and the officials themselves, 
each in respect to all the others. 

This is the constitution of a free state. Because democratic 
philosophers in the nineteenth century did not see clearly that 
the indispensable corollary of representative government is a 
particular mode of governing, they were perplexed by the 
supposed conflict between law and liberty, between social con- 
trol and individual freedom. These conflicts do not exist where 
social control is achieved by a legal order in which reciprocal 
rights are enforced and adjusted. Thus in a free society the 
state does not administer the affairs of men. It administers 
justice among men who conduct their own affairs. 

This definition of popular rule is not an abstraction which 
I have invented because I think it is desirable. It is, I be- 
lieve, a deduction from historic experience in the long struggle 
to disestablish the dominion of men over men. The idea 
must gradually crystallize in men's minds as they deny that 
their kings, their lords and masters, and their leaders, are ap- 
pointed by God to rule over them. For when they no longer 
think of government as the liege man thinks of his king, the 
slave of his lord, the servant of his master, then they must 
think of government as a legal order in which individuals have 
equal and reciprocal rights and duties. 


This change of mind marks the beginning of the manhood, 
the ending of the childhood of the race. Men do not accept 
this conception of government easily. For psychologically 
it calls for a profound change of attitude, and the change is 
accompanied by all the troubles of adolescence j the individual 
is too grown-up to be treated as a child, he is too immature 
to bear tb?. responsibilities of an adult. But those who grow 
up must grow up. The change is irrevocable. Though here 
and there whole nations find the burden of self-government 
intolerable, and relapse for a moment, seeking to live securely 
once more as children, the manifest destiny of mankind is to 
become adult and to replace paternal authority with fraternal 

7. Social Control by Law Rather than by Commands 

In distinguishing between the regulation of affairs by recip- 
rocal rights and duties on the one hand, by overhead adminis- 
trative order on the other, we can, I believe, clarify what 
Burke called "one of the finest problems in legislation," which 
is "What the state ought to take upon itself to direct by the 
public wisdom, and what it ought to leave, with as little inter- 
ference as possible, to individual discretion." lf 

This problem baffled the influential thinkers and statesmen 
of the nineteenth century, and their failure to elucidate it suc- 
cessfully caused that popular bewilderment in which men came 
to think that they must make an exclusive choice between the 
anarchy of unrestrained property owners and the management 
of property by public officials. They thought they had to 
decide between doing nothing and administering almost every- 
thing. Those who wished to let things alone called them- 
selves individualists and said they believed in liberty. Those 

* "Thought* and Details on Scarcity," Works, VoL V, p. 107. 


who wished to direct the course of affairs became collectivism 
and appealed to the desire for security, order, and equality. 

The choice is not, I think, exclusive, and it has been posed 
only because of faulty observation and an insufficient analysis. 
There is no exclusive choice between direction by the state and 
noninterference with individual behavior, between state col- 
lectivism and laissez-faire as understood by the latter-day liber- 
als. This supposed choice ignores the whole immense field 
occupied by the development of private rights and duties, and, 
therefore, it is not true that individuals must be left to do 
what they like or be told by officials what they must do. There- 
is another way, the way of the common law, in which abuses are 
regulated and public policy is made effective by altering the 
private rights that are enforceable in the courts. 

This becomes self-evident when we 
laissez-faire theorists forgot: that the i 
talking about exists by virtue of lawful rights tjiat 'kjcftnf orced 
by the state. 20 The title to property is a con 
Contracts are legal instruments. Coi 
tures. It is, therefore, misleading to think o 
somehow outside the law and then to ask wheth 
to "interfere" with them. Thus the English 
the inheritance of real property produced a diffe 
tion of property from that produced by the French law. For 
in England the oldest son had different legal rights from those 
he had in France. Property of any kind, contracts of any kind, 
corporate organization of any kind, exist only because there are 
certain rights and immunities which can be enforced, when they 
have been legally established, by enlisting the coercive au- 
thority of the state. To speak of letting things alone is, there- 
fore, to use a meaningless and a deceptive phrase. No one who 

10 Cf. Ernest Barker's Translator's Introduction to Gierke's Natural Law 
and the Theory of Society, UOL. 


asks to be let alone really wishes to be let completely alone: 
what he asks is that he be enabled to enjoy the undisputed exer- 
cise of the rights which he enjoys. But he expects the state 
to interfere promptly and effectively if anyone disturbs him. 
He insists that his rights shall be enforced. 

For some curious reason, the debate between individualists 
and collectivists has been carried on with both factions assuming 
that the existing system of private rights must either be left 
undisturbed or that it must be abolished} that existing rights 
must be maintained absolutely or extinguished absolutely} 
that either "property" must be what it happened to be when 
they were quarreling about it or the means of production must 
be administered by officials of the state. The dilemma is un- 
real and unnecessary. The system of private land tenure which 
happens to prevail at one moment in some country is not the 
only possible system of land tenure. The only possible alter- 
native is not the nationalization of the land. The alternative 
may be any one of innumerable other systems of private land 
tenure. The only possible alternative to the existing system 
of private contract in industrial relations is not the replacement 
of private contracts by public administration. There are many 
alternatives, many possible ways of changing the kinds of pri- 
vate contracts that the law will require the courts to enforce. 
The only alternative to the concentrated corporate control of 
industry is not a concentrated government control of business 
corporatipns. It may be any one of many possible modifica- 
tions of the law of corporate rights. 

But in the nineteenth century individualists and collectivists 
alike persuaded themselves that the existing system of private 
rights could not be modified: that it had either to be maintained 
or to be superseded. Thus they created for themselves the fatal 
dilemma which has divided mankind into those who merely wish 
to preserve the status quo with all its abuses and those who wish 


to make a new social order by the authoritarian power of the 
state. Collectivists and individualists had lost sight of one 
of the most obvious facts in human experience, that great and 
salutary changes in human relations can be and usually have 
been effected not by commands from on high but by amending 
the laws under which men deal with one another. 

Any student of history could have told them that laws have 
changed radically in the course of history. Yet it was some- 
how assumed that laws were absolute, and therefore incapable 
of serious modification. So the debate has proceeded on the 
assumption that the choice lies between stubborn conservatism 
and complete revolution, that the rights of property as they 
stood in the nineteenth century have either to be confirmed and 
protected or that property owners have to be expropriated and 
their possessions administered by the state. The latter-day 
liberals, having committed themselves to the fallacy that ex- 
isting rights are absolute, have been inhibited by their own 
fallacy from working out any programme to relieve the evils 
of modern society. The collectivists, believing in the same 
fallacy, merely drew an opposite conclusion. They turned to 
the state as deus ex machina, believing that the relief which 
could not be obtained by a readjustment of personal rights 
could be obtained by authoritative commands. 

The essential intellectual difficulty may be seen in Burke's 
statement of the problem. He assumes that the state must 
either "direct" or must not interfere." But suppose I invent 
a new mousetrap and suppose the law says that no one may use 
my invention during my lifetime without paying me the roy- 
alty I choose to charge. Is this direction or is it interference? 
Now suppose the state amends the law, saying that I have an 
exclusive patent for five years only: after that anyone may copy 
my mousetrap without being liable to a suit for damages. That 
amendment of the law will radically alter the mousetrap 

situation. But is this act of social control to be called direction 


or is it to be called non+nterjerence? From my point of view 
I suppose I have been interfered with. But my neighbors might 
say that they have been released from an undue interference 
on my part with their right to catch mice more successfully j 
that I was levying an unjust toll for an invention that was 
probably suggested to me, in part at least, by someone else's 

Is it not clear that the terms of the discussion do not really 
fit the facts, and that the debate could go on forever? A change 
in the law governing my right to patent the invention does not 
fit into either of Burke's categories. Yet the change in the law 
causes a real change in the situation. Though the state has 
not undertaken to direct the invention or to administer the 
manufacture of mousetraps, it is not letting me "alone" without 
social control. The change is brought by a readjustment of 
the rights of my neighbors and of myself. Impressive social 
changes may have been effected the public health improved, 
a new industry brought into being, I prevented from becom- 
ing a millionaire, my neighbors relieved of a bitter grievance, 
good feeling promoted. But these things have been done 
without appointing new officials empowered to issue commands 
to anyone. 

There are not, then, as Burke and so many after him as- 
sumed, only two realms, one in which there is no regulation 
of men's behavior, another in which men must obey the com- 
mands of their superiors. To state the problem in this fashion 
is to overlook the realm of private rights and duties where sig- 
nificant relations are regulated by general laws impartially ap- 
plied to specific controversies, not by commands issued by some 
men to other men. Except where a few solitary individuals 
subsist in a wilderness, the actual choice is between the regula- 
tion of social affairs by adjudicating and adjusting private* 


rights on the one hand, by arbitrary sovereign commands on the 
other. The one is the method of a common lawj the other 
the method of the prerogatives of superior persons. The 
one is the system of democratic liberalism, the other of authori- 
tarian collectivism. 21 

In the light of this distinction much unnecessary confusion is 
dissipated. We shall not, for example, fall into the error of 
regarding the existing law of property, of contracts, of corpora- 
tions, as marking a realm in which the state does not or should 
not intervene. We shall recognize it for what it is, as a struc- 
ture of rights and duties, immunities and privileges, built by 
custom, judicial interpretation, and statute, and maintained 
by the coercive authority of the state. We shall not think of 
all this as subsisting somehow outside the law, and then become 
involved in an empty debate as to whether the law may inter- 
fere with it. The whole of it, all property, and everything 
which we include in the general name of private enterprise, is 
the product of a legal development and can exist only by 
virtue of the law. This is evident enough in periods of 
social disorder when for want of law observance and law 
enforcement the whole private economy may collapse in a 

We shall not compound the error by thinking that the law 
of property contracts and corporations is immutable. 

8. The Regulation of Property 

It was, as we have already seen, at this point that nineteenth- 
century liberalism came to a dead end: where it chose to treat 
property and the powers of the business corporation as in ef- 
fect absolute and untouchable. Then it was that liberal states- 

91 See Chs. IV and V for the dependence of collectivism on authoritarian- 


men, being unable to regulate property and corporations ef- 
fectively, had to give way to the collectivism. 

The latter-day liberals had a vague notion that they must 
regard private property as approximating, to use Bkdcstone's 
words, "that sole and despotic dominion which one man claims 
and exercises over the external things of the world, in total ex- 
clusion of the right of any other individual in the universe." * 
But no such sole and despotic dominion exists or can be es- 
tablished, and it was a signal disservice to the maintenance of 
free enterprise when men attempted to claim and to exercise 
such a sole and despotic dominion. For the rights of property 
have no existence outside the law: they are simply the rights 
which courts of kw will recognize. No man can hold or enjoy 
property openly and securely except by virtue of the readiness 
of the state to enforce his lawful right. Without a lawful 
title, he has no property; he is merely a possessor without re- 
course against those who are strong enough to help themselves 
to his goods. 

Not only is all property a right established by kw and en- 
forceable at kw: all property is a complex system of rights. 
This system is not the same system in respect to all kinds of 
things. It is not the same system at all times in respect to the 
same things. It is not the same system in all places at the 
same time in respect to the same things. In other words there 
is no such thing as an absolute, immutable, and indefeasible sys- 
tem of property rights. 

Thus the system of private property is not uniform for urban 
land and for land at the frontier. The title to urban land 
may, for example, be subject to zoning ordinances which com- 
pletely nullify any pretension that the owner exercises a sole 
and despotic dominion, "in total exclusion of the right of any 
other individual." If, in defiance of the zoning ordinance, he 

** Blacbtone, Commentaries, Bk. II, Ch. I. 


attempts to establish a garage, his neighbors have rights which 
they can enforce. The landowner has no absolute rights in his 
property} he has only conditional rights which vary from place 
to place* He cannot put up a jerry-built structure on Broadway, 
but he can, if he likes, go out into the open country and build 
himself a house of wood and paper held together by safety 
pins. Moreover, he holds his property on Broadway subject 
not only to the existing building laws but to future changes in 
those laws. And the same is true of his house in the country: 
if, for example, it were judged to be a fire hazard, his neighbors 
by a change in the law might be invested with the right to pro- 
tect themselves by bringing suit or entering a complaint. 

The same property rights do not adhere to land which con- 
tains minerals, to land which controls water power, to land 
usable for bridgeheads, ferry landings, and highways, for rail- 
way tracks and conduits in city streets. The rights of property 
are not uniform in patents, in animals, in news gathered by re- 
porters, in radio channels, in the air traversed by flying ma- 
chines, in gold, silver, and platinum, in an author's manuscript, 
in all inheritances and in all gifts. Though we think of all 
these rights as property, in fact property consists of an ex- 
tremely varied collection of rights. 

What is more, the special rights which make up different 
kinds of property are not immutable. Before the appearance 
of the airplane the owner of a piece of land was held to have a 
title to a pyramid which had its apex at the centre of the earth 
and an infinitely wide base out in infinite space. Under a 
recent decision in an American court, his rights in the air extend 
no higher up than a safe distance above the roof of his house. 
The conditions on which the title to land can be enjoyed, ac- 
quired by sale, transmitted ,by gift or inheritance, have been 
profoundly modified again and again. Less than three hun- 
dred years ago, for example, the obligation of the English 



tenant to render personal services to the lord of the manor was 
commuted to the payment of a pecuniary rent. The right of 
the landlord to appropriate the monopoly rent of the land is 
by no means absolute, being subject to the power both of 
eminent domain and of taxation. 

If we ask ourselves whether in this bewildering complex of 
rights which men call property there is any clarifying principle 
of order, we must, it seems to me, take as our premise the prin- 
ciple enunciated 6y Sir William Blackstone that "the earth . . . 
and all things therein are the general property of all mankind, 
exclusive of other beings, from the immediate gift of the 
Creator." *J This does not mean that the earth and all things 
therein should be administered by a central collectivist au- 
thority or that individuals should not or cannot be made secure 
in the enjoyment of private rights. But it does mean that 
no individual can or should exercise a sole and despotic do- 
minion over any portion of the earth or of the things therein. 
The earth is limited in size and its use is necessary to every 
man's existence. Therefore, the rights of any man upon the 
earth must be reconciled with the equal rights of other men, 
not only of living men but of the unborn generations. No one 
in his senses can therefore believe in an absolute right of 
property which would permit the transient possessors of the 
land to destroy its fertility, to burn down forests, to cause the 
streams to dry up, to squander at will the minerals under the 
surface. These owners did not make these resources. They 
are unable to re-create them. What title have they then to 
claim that posterity has no rights which they must respect? 
The true doctrine surely is that men hold property in limited 
and necessary natural resources, not as sovereigns, but as 
tenants who have rights and also duties of mankind. 

And likewise, no one believes in an absolute light of property 

21 Of. <*., Bk. II, Ch. I. 


which gives such exclusive possession that proptrty owners can 
so monopolize the land and the resources that other men can 
live only by paying the price they choose to exact. Men may 
pretend to believe in such a theory of property. In practice 
it is unworkable. The dispossessed and the disinherited will 
haunt them and terrorize them. The desperate insecurity of 
all private property in the modern world is due to the fact that 
the propertied classes, in resisting a modification of their rights, 
have aroused the revolutionary impulse to abolish all their 
rights. Modern bolshevism is the product of the attempt to 
make property an absolute right. 

The real security of private property must rest not on a 
fatuous longing for a sole and despotic dominion over the 
necessities of all men's existence but on a reconciliation of all 
men's claims in a system of substantially equal rights. It is 
not loyalty to the causq of private property to confirm the 
monopolists in their privileges. To do that is to prepare the 
extinction of private property either by general disorder and 
pillage or by the establishment of an administered collectivism, 
The true principle is to be ready to liquidate these rights of 
possession which enable some men, by excluding all other men 
from access to land and to the resources of nature, to exact a 
tribute based not on their own labor but on mere legal 
possession. , 

If all property is a complex of legal rights, the business 
corporation, with its privilege of limited liability and perpetual 
succession, is even more obviously a legal creation. It is no 
exaggeration to say that without the corporate device modern 
capitalism could not have been evolved. Now an aggregation 
of individuals can, when they are incorporated, do things which 
they could not possibly do as separate individuals nor as an in- 
formal association of individuals. They can do these things 
only because of legal rights acquired in their charter. But for 


that charter they would have separate and unlimited liability 
for the acts done by their association 5 when one of them died or 
resigned, the association would have been dissolved, like a 
marriage or a partnership. 

It is plain that a corporation enjoys great advantages as 
against unincorporated individuals. It can assemble the prop- 
erty of great masses of individuals, administer it collectively, 
and, though its directors or managers fall sick or die, the cor- 
porate organization goes on. Now all of these advantages are 
created and maintained by the law which says that under certain 
conditions individuals have the right to incorporate and as a 
corporation to enjoy certain privileges and immunities. How 
can such rights be regarded as inalienable and immutable? Is 
it not evident that in granting the privilege of incorporation 
the state may fix the conditions, that it may say what the rights 
of an incorporated body are, that it may say that the privilege 
of limited liability and perpetual succession shall be enjoyed 
only in so far as the corporation meets certain specific obliga- 

Yet for reasons which it is not necessary for us to examine 
here, the ability to incorporate came to be regarded in the 
nineteenth century not as a privilege granted by law but as 
some sort of unquestionable right. The founders of the 
American Republic had no such notion and the liberals of the 
eighteenth century would have regarded it as preposterous. 

A charter of incorporation to use property for profit is a 
state-created privilege, particularly when it grants to its mem- 
bers the partial immunity of limited liability. There is, there- 
fore, no reason why that charter shoruld be vague and general: 
it can be made as specific in its definition of what rights the 
corporation may exercise and what duties it must perform as 
the lawmakers choose to make it. In the charter and in the 
statutes governing corporations they can stipulate any public 


policy they deem desirable. They can stipulate that the mem- 
bers of the corporation shall not enjoy limited liability or 
perpetual succession If the courts find that they have violated 
the terms of the charter. The lawmakers can stipulate the 
grounds on which competitors, customers, employees, creditors, 
and debtors may sue for violations of the charter and the law. 
Moreover, the lawmakers may stipulate, if they deem it wise, 
how much land a corporation may own and no title in excess 
of that amount would be a good title. They may stipulate 
as to whether one corporation may own another, for how long 
and on what terms it may own patents, in what measure it may 
own natural resources, whether it shall be capitalized through 
the issue of bonds or 'equity shares, what shall be the rights 
of its security holders. They may stipulate the manner in 
which the accounts shall be kept, and what information must 
be made public and how often. 

Thus, without overhead direction, a very comprehensive 
regulation of corporate activity is feasible. It can be achieved 
by defining in the law the respective rights of a corporation 
and of those wit{\ whom it transacts business. Yet such a sys- 
tem of regulation does not invest public officials with the au- 
thority to administer the affairs of the corporation or to issue 
commands and prohibitions to the corporate managers. It 
does not increase the power of officials over the life and labor 
of citizens. It merely readjusts, theoretically in any degree 
and in any manner, the rights of citizens with one another, and 
then relies upon individuals to put the law in motion when 
they believe they can prove in court that their rights have been 

But though, theoretically, the lawmakers could set any con- 
ditions they chose upon the right to incorporate, in fact they 
could not legislate capriciously. For as they approached the 
point where they were converting the privileges of incorpora- 


tion into a risk and a burden, men would simply turn in their 
corporate charters and revert to some form of partnership. At 
that point the social advantages of the corporation would be 
lost, and the excessive rights against corporations granted to 
customers, employees, investors, or competitors, would have 
defeated their own purposes. Thus the system would have to 
be reasonable in order to be effective. It would have to repre- 
sent a wise reconciliation of collaborating and competing in- 
terests. But that is one of the paramount virtues of the liberal 
method of regulating human affairs through the adjustment 
of private rights: that it is compelled to work, not by the com- 
pulsion of irresistible authority from on high but by concilia- 
tion, justice, and comity among persons. 

It has been a great illusion to think of the modern business 
corporation as a kind of autonomous principality with inherent 
power derived from some mysterious source that is independent 
of the state. The power of the business corporation is en- 
tirely a power granted by the state, dependent from day to day 
upon the continued enforcement of the law by the state which 
has invested it with its privileges and immunities. It cannot 
be true, as so many lawyers have argued, that corporate rights 
are inalienable and immutable and indefeasible. Previous to 
about 1850 a special act of the legislature was needed in order 
to charter a corporation. Fifty years ago no common-law 
lawyer would have thought it conceivable that one corporation 
could own the stock of another. The business corporation, as 
we know it, is founded on the fact that legislatures and courts 
gradually invested incorporated associations with new rights, 
rights which did not exist a hundred years ago, rights which 
can, therefore, by no stretch of the imagination be regarded as 
anything but conditional and subject to alteration. 

By the same token it is no less untrue that modern corporate 
capitalism is a predestined development due to some mysterious 


necessity of the machine process, or to some inexorable tendency 
to the agglomeration of wealth and power. The promoters 
of the giant corporation were not giants to whom ordinary men 
had to yield. They were ordinarily enterprising men who 
made the most of legal privileges with which legislatures and 
courts had inadvertently endowed them. The essential ele- 
ments out of which the giant corporations were assembled were 
titles to land and natural resources and patents, limited liability 
for debts and damages, perpetual succession, their chartered 
right to set up an internal government of the corporate organi- 

Any or all of these elements could have been and can at any 
time be redefined and subjected to new conditions. In short, 
their existing rights are not absolute. The development of 
private corporate collectivism is in no sense inevitable. The 
potentialities of regulation are as numerous and varied as the 
points at which the corporation has relations with its cus- 
tomers, its employees, its competitors, its providers of raw ma- 
terials and transportation, its stockholders and bondholders, its 
neighbors in the places where it operates, and the tax collector. 
The field of the business corporation is not an immunized area 
which is sterile to the possibility of reform and regulation. 
The business corporation can be reformed and regulated by a 
readjustment of private rights, and there is no reason whatever 
for the assumption, made both by individualists and by col- 
lectivists, that corporations must either be allowed to enjoy 
all their present rights or be taken over and administered by 
the state. 



1. The Function of Officials 

THE prospects of freedom depend very largely upon whether 
the intellectual leaders of the modern world can recover the 
intellectual habit of looking for a solution of social problems 
by the readjustment of private rights rather than by public 
administration. In the debacle of liberalism this habit was 
lost, and the art of free government has been almost forgotten. 
When contemporary men are confronted with a problem, 
they no longer inquire whether it can be solved by altering the 
reciprocal rights and duties of individuals: the preferred solu- 
tion is almost invariably to invest officials with authority to 
enforce a solution. Intellectually, this is the easier way. For 
it requires no great genius, or even much thinking, to deal with 
an evil by advising someone to order it cured. Any fool, it 
has been said, can govern under martial law and any tyro can 
enjoy the delusion of Saving advanced the interest of mankind 
by establishing an armed official with a mandate to advance the 
general welfare. But it is only a delusion to think that the 
infinite complexity of human affairs has been put in order by 
calling in an omnipotent official. All that the thinker has done 
is to relieve himself of his own perplexities by passing them on 
to the bureaucracy. He has solved no problem. He has 
merely appointed officials with a mandate to solve the problem 
for him. 


Officials can, for example, regulate the traffic on the roads: 
they can see to it that the ruthless and the reckless do not inter- 
fere with the other drivers. By progressive refinements of 
the rules, they can make it more and more possible for all the 
drivers to reach their destinations as safely and as conveniently 
as circumstances permit. But if, instead of defining the rights 
of all the drivers, the officials seek to prescribe the destination 
of each driver, telling him when he must start, by what route 
he must go, and when he must arrive, some few, those who 
have the ear of the authorities, will undoubtedly go just where 
they want to go, more swiftly, more pleasantly, than under a 
free system of equal rights. But the rest will be going where 
they do not wish to go, and it must become their ambition to 
oust the existing traffic officers and install officers who will direct 
the traffic to their advantage. 

Yet many arguments can be advanced in favor of the au- 
thoritarian system. It can be said that by intelligent dis- 
crimination it might be arranged that those who have the most 
important errands shall not be held up by a clutter of cars full 
of persons who are merely out for a ride, or are on their way 
to some frivolous pastime, perhaps to an immoral one. It can 
be said that the biologically finer breeds, or those with the 
higher intelligence quotients, or those with the best moral 
character, ought to get to their destinations first. Much can 
be said, and has been said, about how an intelligently planned 
direction of the traffic would overcome the chaos of individuals 
going hither and yon, using up gas and oil, wearing out rubber 
and steel, indulging their taste for low amusements rather 
than dedicating themselves to high aesthetic, hygienic, in- 
tellectual, and spiritual aims. 

Though many think they could direct not only the traffic 
on the highways but all the occupations of all the people, in 
fact no one knows how to do that. There is no way of agreeing 


on what the destinations of-all the drivers shall be. But it is 
possible to agree on traffic regulations which offer the same 
rights and the same obligations to all the drivers who choose 
to take to the road. That kind of government officials and 
motorists can understand. Jts problems are problems which 
they can study and debate, and the solutions can be perfected 
progressively. To dispense the justice of equal rights is an 
intelligible, an objective, a human, criterion. But the other 
kind of government, by authoritative direction, is speculative 
and subjective in principle, and in practice it is almost certain 
to be predatory and acquisitive government by officials for 
their favorites. 

The conception of equal rights establishes a norm which 
fixes what ambitious politicians may promise, what individuals 
expect. But when officials are appointed to act as little tin 
gods over men, as Moses and Caesar rolled into one, they 
are merely arbitrary and capricious even if well-intentioned 
human beings who have more authority than they know 
how to exercise. 

So we must ask ourselves what is the true function of the 
official. We have defined the liberal state as one in which 
social control is achieved mainly by administering justice 
among men rather than by administering men and their 
affairs by overhead authority. It follows that the temper 
of officialdom in a liberal society must be predominantly 
judicial: that holds not only for the judges themselves but 
for the legislators and executives as well, indeed for all who 
wish to serve the public interest. Except, of course, in emerr 
gencies when a community must temporarily renounce its 
freedom in order to defend itself against attack, upheaval, 
and disaster, the primary task of liberal statesmanship is to 
judge the claims of particular interests asking a revision of 


laws, and to endeavor amidst these conflicting claims to make 
equitable decisions. 1 

Owing to a rather artificial classification of the powers of 
government, we are not accustomed to think of legislators 
and executives as exercising an essentially judicial function. 
We think of them as exercising not only separate but radically 
different functions. But this is a naive theory. It supposes 
that the legislature is a kind of Moses, which ascends Mt. 
Sinai at stated intervals, hears the voice of God in the voice of 
the People, and then descends bearing with it additional 
commandments to the executive $ as Caesar, or perhaps I should 
say Joshua, the executive then leads his hosts to battle and 
into the Promised Land. 

For the ordinary and the enduring development of a modern 
society such images are quite misleading. If we observe closely 
how legislative and executive policies are arrived at, we find, 
I feel sure, that they are usually adopted by the official after 
he has weighed the claims of various conflicting interests. He 
listens to the advocates, some of whom actually appear before 
him, some of whom write him letters, many of whom shout at 
him through the newspapers and over the radio. In, his own 
mind he holds a kind of court judging the claims by whatever 
criterion he happens to respect. 

But the more clearly he understands what he is doing, that 
he is not there to impose his will but to judge among visible 
claimants and invisible interests, the more likely he is to* set 
himself a sound and workable criterion of the public interest. 
For in thinking of himself as judge rather than as lawgiver or 
leader, he will come to see that the essential question for him 

1 Cf. E. Pendleton Herring's Public Administration and the Public In- 
tertst y p. 7, on "the fundamental necessity of achieving a working com- 
promise among class and sectional interests." 


is not what he personally may think is the best way but What 
is the fairest decision. Which of these parties is the aggressor 
seeking to obtain special advantages for himself? If the 
official seeks justice, he will decide against the aggressor. What 
interests, for example, of posterity, are not represented in the 
controversy? He will see that they are represented and prop- 
erly heard. If, on the other hand, he fancies himself the con- 
triver of the human destiny and its master, he will have no 
criterion for his decisions: he will be lost in confused subjective 
speculation as to which of the parties asking his support is more 
likely to shape the world according to his haphazard notions 
of what that shape ought to be. 

In so far as there is any fundamental distinction between the 
functions of judge and of legislator, it is that, strictly speaking, 
the judges attempt to apply the law as they believe it to be, 
while legislators amend it to make it more equitable. But this 
distinction is a matter of practice rather than of principle. 
The earliest great representative assembly, the Anglo-Saxon 
Witenagemot, was "primarily judicial, in the first instance 
always judicial; that is, it never made new laws. It got to- 
gether to try the people for the breach of lawj and that in- 
cidentally brought up the validity of the old law, and then de- 
cided whether the old law was valid or not." 2 Our modern dis- 
tinction between the legislative and the judicial functions has a 
certain practical value in that it helps to preserve the judicial 
temper of at least one branch of the government. But by over- 
emphasis we have obscured the real nature of lawmaking; we 
have established a twilight zone between constitutional or 
statutory law, which is necessarily general in character, and the 
law which the courts enforce in specific cases; in this twilight 
zone judges and legislatures have waged a struggle. But most 

*Stimion, of. /., p. 9. 


of all we have invited the modern legislator to forget that the 
making of laws is no less a judicial function than the disposi- 
tion of cases under the laws. 

For the enactment of a new law is a judgment rendered for 
certain interests and against certain others. If the new statute 
changes, let us say, the law of contracts or of real property or of 
the employer's liability, it is a judgment rendered by the legis- 
lature among contending private interests. If the statute 
authorizes public officials to levy taxes and raise armies, it is a 
judgment rendered by the legislature as between the govern- 
ment and private interests. If the statute establishes a priv- 
ilege, bestows a franchise or charters a corporation, or gives a 
patent of monopoly, it represents a judgment placing the state 
in partnership with certain private interests as against other 
private interests. But in modern times men have come to think 
that because there are practical reasons for separating and 
specializing the legislative and judicial functions, they are 
morally and psychologically distinct. 

They are not. When the legislator ceases to think of him- 
self as an impartial judge among contending interests, he soon 
adopts an imperial view of his function. He ceases to judge 
causes among the people: he issues commands to the people, and 
regards himself no longer as the representative of their true 
will but as the providential contriver of their destiny. Against 
this imperial view of the state, which comes down from the 
Byzantine emperors and was revived in Europe by the study 
of Roman law during the Renaissance, 8 the liberal movement 
has always fought. The imperial view is that the official de- 
crees the law according to his will rather than that the official 
finds the law by judging causes. This is the legal theory of 
absolutism. To that theory the modern collectivists and all 

* Pound, of. /., p. 77. 


the believers in legislative or executive supremacy have re- 

The growing complaint of legislators that judges are legis- 
lating is the obverse of the fact that lawmakers have ceased to 
be judges. Legislators have come to think of themselves as 
the lineal descendants of the Gesars, and the heirs of their 
sovereignty. Against this revival of the absolute state, the 
courts have sought to provide a refuge. They have given 
refuge to many interests that probably ought not to have it. 
They have also given protection to many. vital human interests 
against the tyranny and arbitrariness of legislative majorities. 
But their "judicial usurpation" would not have received so 
much popular assent had men not realized that its complement 
was the growing dictatorship of lawmakers. Yet two wrongs 
do not make a right. Both are perversions of the liberal 
state, arising from the failure to recognize that the legis- 
lative function is only a more generalized form of the judi- 

The separation of the two functions is a question of ex- 
pediency rather than of principle. In the United States the 
separation is supposed to be very sharp. In Britain it is much 
less sharp. In so far as the distinction can be defined it may 
be said that the concern of the legislature is with the improve- 
ment of the law. When the amendments required are rather 
substantial, then judges, who are not directly responsive to the 
popular will, cannot properly take the responsibility of amend- 
ing the law. But in the nature of things the distinction between 
judicial and legislative development of the law is not sharp. 
For judges and parliaments deal with the same body of laws. 
These laws must change with changing circumstances. They 
must be adapted to the unforeseen details of human affairs. 
The changes are necessarily effected by judicial interpretation, 
by statute, and by administrative practice. 


2. The Enforcement of Law 

I return to the main line of the argument, which is that in a 
liberal democracy the law must seek primarily to regulate 
human affairs by a system of individual rights and duties rather 
than by administrative commands from the ruling officialdom. 
For the convenience of the argument I have called this the 
reciprocal method of social control as distinguished from the 
overhead method of regulating human relations. In broad 
terms we may then say that liberalism seeks to govern primarily 
by applying and perfecting reciprocal obligations, whereas 
authoritarianism governs primarily by the handing down of 
decrees. The liberal system seeks to define what one man 
may expect from all other men, including the officials of the 
state, and to guarantee that expectation. The authoritarian 
system permits the official to declare what he wishes other men 
to do and itf enforce his will. 

In the liberal order the state exerts social control chiefly 
through the judicial hearing of individual complaints and the 
provision of individual remedies in legal parlance, through 
private suits for breach of contracts and private action based on 
torts j and then finally through legislative action on complaints 
against the law itself. The aggrieved individual may go to . 
law and may invoke the coercive power of the state if he can 
prove his case. But he does not have to go to law or into 
politics: he may, if he chooses, make a private settlement which 
on the whole seems more suitable in the circumstances, more 
advantageous all around, more productive of good will, than 
an appeal to the force of the state. For the liberal order, which 
has developed legally out of the customary law of the people 
rather than out of the promulgated law of the sovereign, is 
true to its origins. It has a respectful prejudice in favor of the 
arrangements men arrive at by usage in their transactions with 


one another, and it permits customary law to grow by using a 
method of control in which men may, but need not always, in- 
voke the authority of the state. It leaves them room to adjust 
their differences as well as to enforce their rights. 4 

In the authoritarian system, transactions are not among in- 
dividuals but between the authorities and the individual. The 
law gets itself enforced not through suits between Smith and 
Jones but in suits between the Sovereign and Jones. The 
authoritarian prefers to translate torts into misdemeanors and 
felonies: his prejudice leads him to make private wrongs into 
public crimes and to characterize them as treason. In his view 
the injury is not done by Jones against Smith but by Jones 
against the majesty of the state. Thus in Russia the stealing 
of public property is a capital offense, though a private murder 
is punished by ten years' imprisonment. In the reciprocal 
system large allowances can be made for all manner of private 
compromise, of man-to-man conciliation. But in the overhead 
method of social control an offense is more than the offense it- 
self: it is a defiance of the sovereign, an impairment of his 
majesty, and compromise by negotiation is a breach of dis- 
cipline, a blow at the prestige of the state, a symptom of weak- 
ness and corruption. 

. It will readily be seen why the authoritarian system is so 
suitable to crises, and particularly to the waging of war. In 
so far as large masses of men have to do unusual things 
promptly, they can be manoeuvred only if they are well regi- 
mented to obey commands froih headquarters. The pattern 
is military and, as we have seen, all authoritarian societies be- 
come highly militarized. The liberal order, on the contrary, 


4 On the question of, when individuals should enforce their rights and 
when they may compromise them, cf. Rudolph von Ihering's The Struggle 
for Law. Translated from the fifth German edition by John J. Lalor, with 
introduction by Albert Kocourek, 


is intensely civilian in method and tendency: individuals trans- 
act their affairs with individuals, and the mass has no collective 
purpose to which individuals are merely the means. 

Although the reciprocal system is obviously unsuited to the 
waging of war, and has to be suspended in all great social crises, 
it has very great advantages of its own. It does not, for one 
thing, require the.recruitment of a great bureaucracy supported 
by an army of inspectors, detectives, policemen, and informers. 
Thus if the people wish to regulate a social evil, let us say 
excessive drinking, they can, if they wish to employ the recip- 
rocal method, define the grounds on which a sober man can 
promptly get satisfaction against a drunkard who injures or 
annoys him. For liberals the problem of social control is 
to devise means by which the sober man can, without undue in- 
convenience and with some advantage to himself, bring the 
drunkard into court, and, having gotten him there, obtain 
reparation if the accusation can be proved. It is true that 
such a system is often cumbersome. For this method of social 
control has long been neglected by theorists and statesmen, and 
no great effort is currently devoted to perfecting it. It seems 
so much easier to pass a law and appoint some officials rather 
than to make it feasible, by mitigating the law's delays and in- 
conveniences, for a sober citizen to proceed against the drunkard. 

The authoritarian method looks less cumbersome. But it 
is really much more cumbersome. It involves an attempt to 
inspect the behavior of all men, the drunkard and the temperate 
alike, to have officials omnipresent, to endow them with an all- 
seeing eye, and to pretend that they are remorselessly diligent. 
But such a great corps of officials continually inspecting every- 
one's affairs is not only expensive; its certain tendency is to 
become tyrannical if it is strong, or to ^become weak because it 
is corrupt; In theory authority ought to deal more effectively 
with drunkenness than a system which makes the drunkard 



liable to the neighbors whom he injures; in practice, among a 
people habituated to freedom, the overhead system of social 
control is almost certain to be ineffective. For the sober citizen 
is likely to condone the drunkenness in order to frustrate the 
tyranny, saying with the English Bishop that he would rather 
have England free than sober. 

In relying wherever feasible upon private actions, the law 
tends to get itself enforced when the offense causes real damage 
rather than when it is a merely theoretical departure from an 
abstract rule. This is an advantage. It is better that the 
coercive power of the law should not be too persistently or 
pervasively employed, that petty offenses and minor irregu- 
larities should be forgiven, forgotten, or somehow expiated 
without involving the majesty of the state. Many a con- 
troversy is very satisfactorily settled when one man has re- 
ceived another's apology and has accepted his invitation to 
lunch. But the inspector has to watch his step before accepting 
an apology, and, if he seals the settlement by accepting the in- 
vitation to lunch, he is likely to be suspected of corruption. 
When shall he prosecute, when shall he accept the apology? 
Among individuals, once the presumption of good faith is es- 
tablished, this is no moral problem/ But in controversies be- 
tween the individual and the state, discretion and forgiveness, 
which are salutary virtues in private life, become suspicious op- 
portunities for favoritism and bribery. Thus the safety valve 
of tyrannies has usually been their inefficiency and their cor- 
ruption. They have been made tolerable only because men 
found ways of frustrating them, of opening up breaches in the 
iron organization through which the vital organic forces of 
social development could be carried on. 

When the initiative to law enforcement is in the injured 
party rather than in the government inspector, the government 

* Cf. von Ihering, of. cit. 


does not normally have to exercise much power in order to 
cany out the award made by the courts. The defeated litigant 
will rarely think of resisting: a constable or two can generally 
collect the damages. Thus there is in this method of social 
control the highest degree of economy in the use of coercion, 
and the greater the society the more necessary it is to economize 
in the exercise of coercion. The law rules easily, by disuniting 
those who might resist, by dealing not with masses but with in- 
dividuals engaged in private controversies with other in- 
dividuals. The overhead method of control, which has to be 
enforced wholesale on multitudes, tends to consolidate men 
into refractory masses j that is why the authoritarian state has 
then to mobilize an enormous official force and official propa- 
ganda to make itself effective. But when human affairs are 
regulated through the judicial determination of rights, there 
is so little display of force that many have been mystified by 
the spectacle of the nine elderly men in black robes on the 
Supreme Court of the United States exercising such undisputed 

The secret of the mystery is that they decide only specific 
controversies, and their rulings stand only because all the lower 
courts will decide all similar controversies in the same way. 
If the highest court has ruled that Jones can collect from Smith, 
then the other courts will rule that in an analogous case Black 
can collect from White. White, advised as to what the decision 
will be, refrains from doing the thing which would allow 
Black to collect damages. The government does not have to 
maintain a perpetual inspection of White's behavior and take 
actionrwhether or not Black thinks, the injury important enough 
to have something drastic done about it. The government 
allows Black and White to worry along as they see fit until 
Black thinks it important enough to bring the police into the 
matter. Then the government stands ready, if Blade can prove 


his case in a court, to enforce his right, if necessary with the 
whole force of the army and navy. But until Black moves, 
the government is under no obligation to watch White, and 
with him the rest of the population. The government does 
not have to discover by its own inspection the occasions when it 
must intervene. It acts when it is called upon to act in a 
specific private controversy, and not because it has the people 
under constant official surveillance. And when the govern- 
ment acts it seeks rather to judge a dispute than to prescribe 
a course of action. 

3. Government Suited to Human Capacity 

Thus the questions presented to officials and to citizens in a 
liberal society are at once more intelligible and more objective 
than they are where officials are attempting to administer the 
social order. They are questions of justice: whether in their 
dealings with each other some men are artificially privileged 
and others artificially handicapped; whether or not men are 
dealing with one another arbitrarily; whether they are using 
fraud, violence, or corruption to obtain their ends. On such 
matters ordinary men are capable of reaching conclusions by 
listening to the advocates, and a public opinion representing 
the consensus of their sentiments can be achieved. 6 But when 
legislatures and electorates are asked to settle, not more or less 
specific and present issues of justice, but the purposes, plans, 
and management of a social order in the future, they have no 
rational criterion for their opinions. They are adrift upon 
an uncharted sea of mere speculation. It is possible for 
ordinary men to decide whether individuals are dealing justly 
with each other; it is even possible for them to take the long 
view and to say whether the rights that are being exercised, 

9 Cf . my Phantom Public. 


say in exploiting the land or employing child labor, injure the 
interests of posterity. But who can say that this man's scheme 
for administering the social order is better than that man's? 
No one can prove his case; each can only make promises. 
Because none can be verified, the claims are then asserted all 
the more willfully. The result is to degrade the consensus 
of opinion into an irresolvable conflict of particular interests. 
But to aim at justice among the interests of individuals is to 
keep opinion wholesome by keeping it close to intelligible issues: 
to aim at a purposeful collectivism is to go off into the empty 
air and encourage a collective madness in which, for want of 
rational criteria, the darkest and most primitive lusts are 
churned up. 

The liberal conception of the state as conciliator and arbiter 
among the private interests of particular men is derived from 
experience. It was not formulated in the fantasies of Jean 
Jacques Rousseau and the fanaticism of the Jacobins: those were 
merely the loose verbalizations of men who seized upon, with- 
out having become habituated to, the ideas which had been 
wrought out empirically in the long centuries during which 
the English common law and English constitutional practice 
were being developed. The romantic democrats made a heady 
wine out of the grapes that had been patiently cultivated in 
an ancient vineyard; and often they become so intoxicated by the 
wine that they forget to tend the vines or wantonly trample 
upon them. Had they understood the lessons of the experience 
in which their whole ideology must find its justification, the 
romantic democrats would not have fallen into the tragic er- 
ror of thinking that once they had cut off the head of the 
king, they could give to the people his sovereign preroga- 
tives. They would not have enticed mankind into the great 
reaction which has overwhelmed it ever since the collectivists 
persuaded the democracies to regard the state, not as judge and 


conciliator among them, but as the providential planner and 
giver of the abundant life. , 

The business of the state must be based on an understanding 
of the limitations of coercive authority} the art of governing 
must call for not more than the ordinarily available wisdom of 
average men. If government is to be carried on, it must be 
suited to human faculties. There are few supermen/ There 
has never been a succession of supermen. When, apart from 
making the community secure against attack and of meeting 
authoritatively the occasional emergencies and disasters which 
cannot be prevented, the state sets up as the administrator of 
enterprises, the planner of the social order, and the director 
of the daily life and labor of the people, it attempts what only 
a god could do well. 

A state commanded by finite men cannot afford to have a 
more grandiose purpose than to dispense justice. When it 
confines itself to that, the state will arouse no false expectations. 
It will be protected by a general recognition that though it does 
not dispense ideal justice, its judgments are guided by the in- 
tention to be fair, that they are arrived at after the parties have 
had their day in court, that they represent no capricious ipse 
dixit of authority, that they are human judgments which may 
be reconsidered and reversed. Such judgments can be ac- 
cepted as the best under the circumstances: they do not tend to 
become issues which must be fought over intransigent^. So 
the liberal state does not have to be supremely wise. That is 
more than a state can hope to be: the liberal state has only to 
create a sincere conviction that it means to be' fair. 

To convince men of that is to provide a solvent of violent 
assertiveness, an emollient of the highest potency in protecting 
the state against the sense of irremediable wrongs. An au- 
thoritarian regime has no such protection. If it is not wise 
enough to be successful in its great purposes, it must repress 


discontent, distract it by adventures, or be overthrown. A 
judging and conciliatory state subjects itself to no such desperate 
test of its wisdom. The knowledge required for judging 
among rival claims, chiefly to determine which is the more 
equitable, which is the less arbitrary, is a wholly different kind 
of knowledge from that required to administer collectively the 
functions of all claimants. For in an administered order the 
officials must have all the wisdom of all the technicians and 
entrepreneurs and the greater wisdom needed to select and 
forecast the consequences of adopting a particular plan. A state 
which leaves these decisions to the citizenry and judges rights 
and duties according to general rules, improving the rules as 
equity requires, needs officials whose chief intellectual equip- 
ment is a sense of the value of evidence. That is a practicable 
requirement. For it is proved by experience that men can 
render good derisions as judges in affairs which they would be 
entirely incapable of initiating and administering. 

4. Officialdom under Law 

While the liberal state must in general prefer the regula- 
tion of affairs by defining individual rights and duties and by 
adjudicating private controversies, it is obvious enough that 
this method is not universally applicable. The detection and 
prosecution of murder cannot, for example, be left to private 
initiative. Moreover, in a modern community it is necessary 
to do much public work and to provide many social services T 
which, as Adam Smith said, "it can never be for the interest 
of any individual, or small number of individuals, to erect 
and maintain; because the profit could never repay the ex- 
pense to any individual or small number of individuals, though 
it may frequently do much more than repay it to a great so- 

T Cf.Ch.XI. 


ciety." 8 Thus any modern state is bound to recruit a large body 
of officials charged with the enforcement of public rights against 
individuals and with the furnishing of public services. 

The question then is whether such an expansion of govern- 
ment activity is to be regarded as an unavoidable departure 
from liberal principles. Herbert Spencer thought so and in 
his crabbed old age we find him denouncing public-health meas- 
ures as an unwarranted interference with human liberty. If 
he was right, then liberalism would indeed be bankrupt be- 
cause it would be unable to deal with the most obvious prac- 
tical necessities. But we have taken no such view, and we 
have seen that the agenda of liberalism is a long one. I be- 
lieve that it is precisely here, where the liberal agenda appear 
to be at odds with the liberal method of social control, that 
the political principles we have been examining are peculiarly 
indispensable and specially relevant. For if we consider 
the matter closely we must come to the conclusion, I think, 
that the greater the public enterprises which are undertaken, 
the more necessary it becomes that the ultimate sovereign power 
of the state should be employed as judge and conciliator in 
controversies between private interests and public enterprises 
and among the different public enterprises themselves. 

The question becomes clarified when we ask ourselves whether 
the officials who inspect, prosecute, and administer public en- 
terprises are to be regarded as having the attributes of majesty 
or as exercising merely certain specific rights and duties. It 
is customary to speak of them as exercising delegated author- 
ity. But this term is ambiguous. At one time it may mean 
that the government department is specifically chartered to do 
certain things, its rights and duties stipulated and subject to 
challenge and review before a tribunal. Thus the charter 

8 Of. cit.> Bk. IV, Ch. 9, p. 540. 


itself can be challenged and reviewed, and any action by public 
officers can also be challenged and reviewed to determine 
whether it conforms to the charter. This is the liberal mean- 
ing of delegated power. But there is another meaning, if 
there has been delegated to the department the sovereign 
-power to define its own rights and duties and to be the judge 
in controversies to which it is a party. This is authoritarian- 
ism. And between the two the distinction is radical. 

For the liberal conception holds fast to the supremacy of 
law, treating the official as invested with rights which may be 
different from, but are in no sense superior to, the rights with 
which the individual is invested. The official and the citizen 
are equals under the law. The fact that the official wears the 
government's uniform, or has the insignia of the sovereign on 
his letterhead, does not mean that he inherits any of the royal 
prerogatives. He is simply a man among men, with certain 
lawful rights which he may not exceed and certain lawful 
duties which he may not neglect. 

The prejudice which liberals entertain against the multiplica- 
tion of government enterprises has come not from their basic 
principles but from practical experience of how difficult it is to 
keep a powerful bureaucracy under the law, how great is its 
tendency to take to itself the attributes of a Byzantine em- 
peror. On the whole it is a sound prejudice in a world where 
so many men have an insatiable lust for power and are as yet 
so little habituated to respect the law rather than their own 
capricious impulses. 'But, nevertheless, in a modern society 
it is necessary to conduct large public enterprises, to rely in 
part on public initiative in cnf ordng laws, to provide many pub- 
lic works and social services. The essential safeguard against 
the tyranny of arbitrary officials is to be found in applying stead- 
fastly the liberal conception of the official as a man with 


specific rights and duties rather than as a man touched with the 
divinity that hedges the King. 

5. The Regulation of Officials 

Additional difficulties would seem to arise from the fact 
that a representative legislature is often unable to formulate 
effective rules dealing with the intricate and technical concerns 
of the modern economy. Therefore, the statutes which con- 
tain the charter of the officials' rights and (Juries are phrased 
in general terms rather than as specific rights and duties. 
"Congress," says Mr. Herring, "has to an increasing extent 
escaped the onus of directly settling group conflicts by es- 
tablishing under vague legislative mandates independent regu- 
latory boards." 9 No one can doubt that the development of 
adequate laws covering the whole range of a great civilization 
is beyond the capacity of any legislative body. It is beyond 
the capacity of ordinary judges. 

For the modern economy is regulated through many mar- 
kets. The manager of a business enterprise is a buyer and 
seller in markets for funds, materials, labor, services, inven- 
tions, commodities, and his many transactions are correlated 
by the monetary standard. It "is evident that these transac- 
tions cannot be carried out intelligibly or justly if the mone- 
tary standard is not reliable, if the value of the currency is 
subject to sudden and arbitrary changes owing either to special 
manipulation or to impersonal circumstances which inflate or 
deflate it. It is equally true that these multitudinous trans- 
actions between sellers and buyers who rarely meet face to face 
cannot be carried out intelligibly or fairly if there is no reliable 
standard of weights and measures. Nor can the bargains 
be intelligible and fair if the buyer does not know the truth 

9 Op. c*t., p. 7. 


about the supply, and the seller the truth about the demand. 

The perfecting of an adequate system of rights and dudes 
for the modern exchange economy requires a degree of tech- 
nical discrimination and expertness that no representative assem- 
bly can hope to possess. The management of the currency, 
the determination of weights and measures, the regulation 
of public markets, are not simple functions in the modern 
economy. Yet they have to be performed in ordef to make 
effective and to make equitable the system of individual rights 
and duties on which the division of labor depends. 

It would be mere confusion of mind to argue that these 
are not functions of the liberal state. They are inherent in 
its primary function, which is to adjust the social order to the 
economy. Yet it is obvious that these functions can be per- 
formed only by experts using specialized technical procedure. 
So it is as certain to-day as it was during the development of 
the law merchant that the perfecting of the markets cannot be 
effected by the general legislature. Such a function has to 
be delegated. But is it not evident that the more the power 
to legislate is delegated to boards and commissions and courts, 
the more necessary it becomes that the ultimate sovereign power 
should think of itself as the final court of appeal? There must 
be some place where the actions of the commissions can be re- 
viewed 5 there must be tribunals where those who exercise dele- 
gated power can be called to account. 

It is, therefore, a misleading fiction to think of the com- 
missioners as agents of the legislature automatically carrying 
out its implicit intentions, as invested with its sovereign author- 
ity in a particular jurisdiction. The commissioners may much 
more properly be looked upon as men entrusted with tenta- 
tive legislative authority subject to review by the representatives 
of the people. 

Thus the more the legislature delegates its authority to 


specialized organs of government and the less it endeavors to 
define the precise law for complex human affairs, the more 
indispensable is it that the state, through the courts and through 
the legislature itself, should regard itself as a tribunal to re- 
view the conduct of these specialized lawmakers. Unless the 
commissioners are to become autonomous and irresponsible, 
the state must not identify itself with them. For if it does 
identify itself with them, it has not delegated its authority 
it has abdicated its sovereignty. 

For these reasons the liberal conception of the state be- 
comes increasingly appropriate as a social order becomes more 
complex. In so far as it is necessary or expedient to multiply 
commissions and boards, to set up additional government agen- 
cies, the ultimate authority of the state must become less and 
less concerned with detailed legislation and administration, 
more and more concerned with the conflicts of citizens with 
bureaus and of bureaus with one another. If the repre- 
sentative state renounces the function of judge and conciliator, 
it really has no function left: under the pretense of delegating 
its authority to its ministers, it will in reality have entrusted 
the control of affairs to an irresponsible and discordant bureau- 

6. The Control of Public Works and Social Services 

The questions raised when it is deemed desirable to have 
the government undertake public works and provide social 
services involve the same fundamental principles. If the of- 
ficials who conduct these enterprises are regarded as members 
of a public corporation chartered by the state, they will behave 
in one way; if they regard themselves as viceroys with the un- 
limited prerogatives of the sovereign, they will behave in a very 
different way. 


The nature of the problem has been most dearly defined in 
the relations between the army and the civilian authorities in 
a constitutional state. There is no question that an army must 
be publicly administered. But in a constitutional regime the 
army commanders have none of the prerogatives of sover- 
eignty. They can recruit only as many men as the civilian 
legislature authorizes. They can spend only as much money 
as it appropriates. They have no general powers to conscript 
men or money or goods. They cannot determine the pur- 
poses for which the army shall be used. They cannot declare 
war or make peace. Within defined boundaries the com- 
manders have a certain authority under military law. But 
the military law itself is effective only after it has been re- 
viewed and approved by a civilian authority. 

When an army remains within these limitations, it is com- 
patible with a free society: when an army takes to itself general 
authority to conscript, to declare war, to determine the national 
policy, to make its own laws and enforce them as it sees fit, 
the condition known as militarism prevails. It means that 
the military have ceased, as Coke told King James, to be under 
God and the law. When a bureau of civilian officials does the 
same sort of thing, it is called a bureaucracy. 

Now the great difference between public works and social 
services undertaken in a liberal regime and those undertaken 
in an authoritarian is this: in the liberal regime the sovereign, 
that is to say the people through its representatives, thinks of 
itself as chartering public enterprises; in an authoritarian re- 
gime the public enterprises are regarded as the right hand of 
the sovereign and filled with his majesty. A liberal society must, 
of course, provide schools, hospitals, recreation centres, and all 
manner of social services just as it must have a police force and 
an army. But it remains liberal only if the social servants, the 
school authorities or the managers of electric plants, perform 


specific chartered functions and are accountable under the law, 
like the army in a constitutional state. 

Obviously a liberal society cannot dispense with officials, 
and under the complexity of modern industrial civilization 
it must employ many officials. But always the official under 
liberalism must be recognized as having an altogether different 
status from that which he enjoys in an authoritarian regime. 10 
He is simply a citizen employed in a corporate body, which is 
authorized by law to do certain things, as the private owner 
of a piece of property is authorized to do only certain things, 
as the member "of a business corporation is authorized to do 
only certain things. 

The acts that the official, the property owner, the corpora- 
tion member, may do are set forth in the law which stipulates 
their rights and duties. They may be challenged if they 
appear to have exceeded their rights or neglected their duties. 
They may be haled into court. Moreover the stipulations 
in the law itself may be challenged. The claim may be set 
up that existing lawful rights are inequitable that is to say 
that they invest certain men with arbitrary powers, with 
special privileges, that they neglect the interests of others. 
Then the law may be haled before the legislature sitting 
as a kind of high court of equity, and at last before the court 
of public opinion. In advanced liberal societies the decisions 
of the legislature, the executive, and even of the people are 
themselves subject to challenge and review, and there is a 
final appeal from Philip drunk to Philip sober, from the tran- 
sient opinions of the majority to the more thoroughly considered 
opinion of a still larger majority. 

10 Cf. Gierke'* "The Beginnings of the Modern State," Political Theories 
of the Middle Age, p. 99. ". . . Whence spread a process which trans- 
muted the Medianral concept of Office, in such a wise that every office ap- 
peared merely as a commission to use the Power of the State." 


7. Collective Agencies of a Liberal State 

We begin to see now, I think, that the distinction is thin be- 
tween the business corporation, on the one hand, and the sub- 
ordinate public agencies on the other. Both exist because of 
legal rights established and enforced by the state the business 
corporation by virtue of its charter and the laws of corporation, 
the social agency by virtue of an enabling statute. They are 
two means of collective action and the sharp distinction between 
them is recent. It is, I think, untenable. If we examine the 
history of business corporations and of social agencies we see 
that the business enterprises were originally based on grants 
from the sovereign and that the social agencies, such as hospitals 
and schools, and even road commissions, were as often as not 
voluntary organizations which received the patronage of the 
sovereign. 11 Thus most, if not all of the American colonies, 
were settled by chartered companies which later became gov- 
ernments; the western -part of America was opened to set- 
tlement by companies which built railroads and canals and 
highways under government patronage, and then later some 
of these enterprises became "private" and a few wholly 

The private profit-making business corporation soon loses, 
if it ever really had, its status as an enterprise subject to the 
uncontrolled will of its owners. If it operates a "public util- 
ity," which is in fact any enterprise upon which the community 
is highly dependent, it must furnish the service required by the 
community. The owners of the telephone company cannot 
decide suddenly that they choose not to provide telephone 
service to-morrow morning. They do not have the same sort 
of right to do what they like with their property as they have 
when they decide whether to wear their hats or throw them, 

11 Blackstone, of. cit.> Bk. I, p. 472. 


away. It is evident enough that the business corporation which 
operates an important enterprise, employs large numbers of 
workers, is indebted to a multitude of bondholders, is owned 
by a multitude of shareholders, is operated by salaried em- 
ployees, is controlled by men who only in theory represent the 
shareholders that such an organization is no one's private 
and personal enterprise. 

The organization is, in effect, an agency fostered by the state 
for the service of the community, and the only essential differ- 
ence between a large business corporation and a public school 
is that the business corporation is operated for profit to meet the 
demands of the market, whereas the public school is supported 
by taxes to meet a recognized social need which does not have a 
market price. But even this distinction is tenuous. For there 
are many business enterprises which would have to be perpetu- 
ated even if they were run at a loss. We can see that when the 
government is impelled to grant subsidies. And there are many 
public enterprises which are wholly or partially self-sustaining. 
So both the business corporation and the social service are in 
effect agencies created in order to conduct certain collective af- 
fairs of a community. 

They are not the only possible agencies. There is no reason 
for thinking that the field must be divided exclusively between 
profit-making business corporations and tax-supported social 
services. All manner of intermediate forms exist, and others 
could be invented. There are limited-dividend corporations. 
There are regulated corporations which, like the American rail- 
roads, are quasi-public. There are public corporations whose 
obligations are guaranteed by the taxing power of the state. 
There are public corporations whose capital is partly or wholly 
subscribed from tax revenues, but which are required to operate 
in the commercial market. There are privately endowed 
corporations, which, like some of the universities, receive sup- 


plemcntary grants-in-aid from the public treasury. There is 
no reason why new types of corporation should not be created 
to facilitate and encourage producers' and consumers' coSpera- 
tives. There might well be, particularly in the field of educa- 
tion, publicly endowed colleges and institutes of research en- 
trusted to the control, not of public officials or of the legislature, 
but of special constituencies, such as their faculties, their alumni, 
or professional guilds. 

Thus there is no ground for thinking that the liberal state is 
frozen in an inflexible formula. It is hospitable to all manner 
of concerted action. It can create and promote whatever agen- 
cies men may find expedient or desirable. But if it is to be a 
liberal state it must not regard these agencies as arms of the 
sovereign, endowed with the king's prerogatives and above the 
law. It must resolutely regard them as creatures of the law 
invested with specific rights and duties which can be enforced 
and maf be repealed or amended. The powers of these crea- 
tures came from the people acting through their representatives; 
their powers are stipulated in the laws which the representative 
state recognizes 5 and always the state which created them stands 
ready to judge among these its creatures and all who may chal- 
lenge their conduct, or to judge the law itself upon which all 
rights of any kind depend. 

What the liberal state does not do is gather up all rights into 
the state and then exercise them through officials. That is 
authoritarian collectivism, and in that system only officials have 
rights. Then the state is not only the maker of the law; under 
the law it is the only party and the sole judge of its own con- 
duct. In the liberal theory the people through the state have 
created and maintain the rights which make up property, con- 
tract, business corporations, and social agencies. These rights 
the representative state enforces. These rights it can amend. 
It judges causes under its laws. It judges its laws. It appoints 



officials and it establishes collective enterprises. But both re- 
main under a kw by which they can be judged. 

The task of defining, adjudicating, enforcing, and revising 
the reciprocal rights and duties of individuals and corporations 
is the vocation of the representative state. There is no other 
way in which the people can govern. 

8. Natural Associations 

Though it is clear, I think, that the business corporation is a 
creature of the state, there are many other forms of human as- 
sociation which are born and flourish and yet do not depend for 
their existence upon a legal privilege. The family is such an 
association, and so is a community, a religious fellowship, a 
learned society, a clan, a guild. 

A business corporation and a bureau of public officials are 
organizations which could not be assembled without specially 
recognized enforceable rights bestowed by the state. In re- 
gard to government bureaus this is obvious enough j in regard 
to the business corporation jurists and publicists have in the 
past two or three generations been divided. Yet it would seem 
to be plain enough that the modern business corporation could 
not be organized or operated without the legal privilege of 
limited liability, without the right of some proportion of the 
owners to select managers who dispose of the property of all the 
owners. Surely an organization like General Motors Corpora- 
tion is a wholly different type of association from a family, a 
club, a church, a trade-union, a bar association, a medical society, 
or a political party. 

Though here, as in all human phenomena, there are border- 
line cases which it would be hard to classify, it would be doc- 
trinaire not to recognize the practical difference between a 
business organization and a natural association. The one is 


held together by a cash nexus in a framework of legal rights; 
the other is bound together by kinship or fellowship. So when 
in the year 1900 the great Maitland declared that "the age of 
corporations created by way of 'privilege' is passing away," M 
he was undoubtedly describing correctly the course of events 
during the second half of the nineteenth century; it was true 
that legislatures and courts had combihed in regarding the 
business corporation as no longer the subordinate creature of 
the state. But the question is whether this view of the 
business corporation was sound in fact and socially desirable. 
Maitland apparently thought it was, and exclaimed that "it has 
become difficult to maintain that the state makes corporations 
in any other sense than that in which the state makes marriages 
when it declares that people who want to marry can do so by 
going, and cannot do so without going, to church or registry." 
I should, however, suppose that the state made business corpora- 
tions in a radically different sense from that in which it makes 
marriages; for no promoter could marry the capital of the half a 
million shareholders of the American Telephone Company 
without the legal rights contained in a corporate charter. 
But men and women will mate and found families whether they 
go to the registry office or not. No one, on the other hand, 
has ever suggested that the United States Steel Corporation 
was made in heaven. 

The associations into which men group themselves spon- 
taneously, naturally, instinctively, voluntarily, present a very 
different problem of social control from those which are de- 
liberately contrived and organized. In the case of the business 
corporation and the public agency the problem is to define the 
purposes of the legal creature and to see that it conforms to 
them. This is the problem of regulating business corporations 
and government bureaus in the public interest. But in the case 

19 Of. /., nrvni, Maitland's Introduction to Gierke's Political Theories. 


of natural associations the problem is not how the state shall 
regulate an organization it has created, but how it shall ac- 
commodate the smaller associations to each other and to the 
social order as a whole. 

This has been a perplexing problem throughout the develop- 
ment of the modern state. For if the natural associations are 
let entirely alone, a chaotic struggle for survival -ensues in 
which certain groups, be they family clans, or churches, or 
guilds, or political parties, become dominant and tyrannical. 
This was so much the condition of affairs in the seventeenth 
and eighteenth centuries that from the time of the civil wars in 
England to the French Revolution, from Hobbes to the Con- 
stituent Assembly of France which made the Declaration of the 
Rights of Man, there was a growing disposition to deny all 
autonomy to any association. "The Nation is essentially the 
source of all sovereignty 5 nor can any individual or any body 
of men, be entitled to any authority which is not expressly de- 
rived from it." u But it was soon evident that to deny to any 
body of men any authority which is not expressly derived from 
the nation that is to say, from the national legislature 
was to found what we now call a totalitarian state. 1 * It was to 
bring the individual, the family, the local community, the 
church, and the guild directly under the centralized authority 
of the officials of the state. Thus, as Gierke pointed out," the 
isolated individual was left confronting the absolute state with 
no "groups that mediated between the State and the Individual." 

So the pioneer liberals felt that they were on the horns of 
a dilemma, compelled either to let clans, local communities, 
guilds, churches, fight it out and tyrannize over each other, or 

u Declaration of the Rights of Man. 

14 It is one of the ironies of history that Mussolini and Hitler should have 
taken their conception of sovereignty from the extremist doctrinaires of the 
French Revolution. 

14 PoMctl Theories oj the Middle Age, p. 99. 


to suppress them all under the dominion of an absolute state. 
In practice a modus vivendi was arrived at. But liberalism has 
never had mature convictions on the principles which it re- 
quires for mastering this problem. Thus there has always been 
a latent conflict, which may now and then become overt, when, 
for example, the question is raised as to whether the state or the 
parents or the church shall control the education of youth, 
whether the state or private persons shall control scientific in- 
vestigation, whether men working at the same trade may or- 
ganize for their own advantage, to what extent professional 
guilds and labor unions may control their own callings. 

These are among the unsolved problems of liberalism and 
they indicate how much remains to be learned before men will * 
have mastered the art of governing the Great Society. We 
must not in our turn fall into the error of the latter-day liberals 
who imagined that they had a complete and perfected doctrine. 
The liberal philosophy is the product of a long development: 
we are still in the midst of that development and we cannot hope 
to see the end of it. So while we cannot pretend to have a 
satisfactory theory as to how the interests of society as a whole 
can be reconciled with the autonomy of natural associations, we 
can, I think, say that the road to a reconciliation is through 
definition, detailed adjudication, and revision of the reciprocal 
rights and duties of all groups. 

This method recognizes that all men in all their relations, 
whether they are acting alone or in combination with others, are 
under the law. That much it concedes to those who proclaimed 
that no body of men is entitled to any authority not expressly 
derived from the nation. But at the same time it insists that 
the nation shall not exercise its authority by treating the family, 
the local community, the church, the learned society, the guild, 
as government departments; that it shall treat them as associa- 
tions whose rights are defined and may be amended by a state 


which thinks of itself as a judge rather than as a dictator. Lib- 
eralism has no reason to deny that everyone is under the law* 
But* it does deny that anyone is under the authority of public 

Thus it is able to reconcile the freedom of religion with, let 
us say, the prohibition of burnt offerings; it can recognize the 
autonomy of the family along with prohibitions against par- 
ental neglect, infanticide, incest, child marriages, and burning 
widows on the funeral pyre} it can maintain the freedom of the 
press and still have laws against libel} it can recognize guilds 
and labor unions and yet make it unlawful for them to practise 
discrimination and monopoly} it can recognize the right of 
assembly and yet prohibit the assemblage of armed men in 
uniforms. The alternatives to liberalism are either to do noth- 
ing, which is in effect to abrogate civil society and return to a 
state of nature, or to treat individuals and groups as conscripts 
under official command, which is to institute a totalitarian state. 

The liberal method of social control by defining reciprocal 
rights and duties avoids both horns of the dilemma. While the 
practical application presents many difficulties, we may be reason- 
ably certain that no other method of social control is more 
promising. Indeed we may go further and say that laissez- 
faire as understood in our times is mere social uncontrol, and 
that the new absolutisms do not seek to solve the problem but 
to suppress it. 



/. By Centralization of Power 

FOR want of a clear understanding of how a liberal state exer- 
cises social control, a whole series of dilemmas have risen to 
confuse ^and frustrate the progress so brilliant in the years 
before 1870 towards the peaceable union of free and peace- 
able communities. The dilemmas are known in public con- 
troversy as the choice between centralization and home rule, 
between national sovereignty and international order. 

It may be said, I think, that the dilemmas are insoluble by 
men who believe that the only way to exercise social control is 
through commands from a sovereign. For no one can imagine 
a sovereign be it a man, an oligarchy, or a ruling party in 
colored shirts powerful enough to command the whole hu- 
man race. Nor is it conceivable that mankind would long sub- 
mit to him if by drastic revolution and total wars a greater 
Caesar made himself the master of mankind. Against social 
control by command nations will resist in the name of their 
independence, regions will resist in the name of their autonomy, 
individuals will resist in the name of freedom. For the ef- 
fective jurisdiction of government by the rule of commanding 
persons can never be extensive. It is impossible for an authori- 
tarian government to inspect all the transactions of a large pop- 
ulation, to issue enough orders to cover them all, to transmit its 
orders, and tp see that its orders are carried out. Government 
by command from above can be efficient only in a small and 


simple society 5 in a large one, it is impracticable except in brief 
emergencies and, when it is attempted, must soon become in- 
competent and corrupt, and in the end be overthrown by re- 

The reductio ad absurdum of reforms which seek to achieve 
control by overhead planning and command is to be seen most 
clearly in the collectivist theory of world peace. Mr. H. J. 
Laski, for example, tells us in a recent book 1 that "the instru- 
ments of property" that is to say, land and capital used in 
production must be administered by the state. Up to this 
point Mr. Laski is a national collectivist. But that leaves him 
with the problem of maintaining peace among these high- 
powered states. So he goes on to call for "the subjection of the 
discretion of each individual state to the common good" of an 
"international system." 2 This, then, is the way Mr. Laski, 
as a full-blown collectivist, envisages the prospect of peace: 
national governments administering the economic life of their 
peoples are to "subject" themselves to an international society 
which does "economic world-planning." Presumably, if they 
do not subject themselves voluntarily, they are to be subjected 
by a planetary super-state. For unless the World Plan is en- 
forced, it is merely a good resolution. This terrestrial sovereign 
is to be so powerful and so wise that it can decide how much 
cotton the planters in Georgia and in Brazil and in Egypt and 
in Turkestan shall raise; is to be so powerful that it can compel 
Oklahoma, which has oil, to provide Italy, which has no oil, 
with the oil that the world planners think Italy should have. 

It is a mystery to me how anyone can persuade himself that 
this is possible even if it were desirable: how any serious student 
of human affairs can be so wishful as to think that peoples living 
on rich lands will submit to "plans" of this sort, and that com- 

1 The Stole in Tfoory and Practice, llvndtn: Gt9rge Allen Vnwin Ltd.) 


pelling them to submit is the road to peace. As a matter of 
fact we know from the experience of our own time that ad- 
ministered economies are invariably self-contained and mili- 
tarized, that socialist states are national socialist states, 1 and 
that national socialist states find it excessively difficult to main- 
tain peace within their frontiers or to live with each other in 
peace. We do not have to theorize about these matters: since 
1914 we have seen authoritarian government in action on a 
large scale. One large region of the world from Germany and 
Italy in the west to Japan in the east is, except for a few islands 
of liberalism, under authoritarian government. And in this 
region each government is at war with large masses of its own 
subjects and all the governments are in warlike postures w-0- 
w one another. How could it be otherwise? The rulers of 
these states know of no method of establishing peace except by 
making themselves absolutely supreme over their peoples at 
home and over their neighbors abroad. 

2. By Uniform Law 

Yet there is no doubt that the great majority of enlightened 
and' progressive men, though they abhor the methods and many 
of the consequences of absolutism, are deeply tempted to believe 
that there is no other way. They feel that these states do at 
least achieve some kind of law and order in place of the anarchy 
of private acquisitiveness, 4 and that the liberal states of the 

8 The rebellion of Trotzky against Stalin is due to the fact that Stalin has 
acknowledged the reality of socialism by making a national, militarized col- 
lectivism, whereas Trotzky clings passionately to his unrealized and unrealizable 

* Thus American publicists like Mr. Soule in A Planned Society, Mr. Chase 
in The Economy of Abundance, Mr. Beard in The Of en Door at Home, 
though they are confirmed pacifists, look back upon the American war 
economy of 1917-1918 as at least a tentative sketch of a rationally ordered 


nineteenth century could not do this. From the observation 
that a firmer social control is necessary, they are led on to the 
conclusion that small states and local communities cannot ex- 
ercise that control, and that a high degree of centralized au- 
thority is desirable, or, at least, is unavoidable. 

But they are, I believe, confusing notions which need to be 
carefully distinguished. They have confused the aggrandize- 
ment of the executive power with the uniformity of the law. 
They have confused law which comes from the usages of the 
people with the governing power which comes from the preroga- 
tives of conquerors and masters. 

Historically and practically they are wholly different things. 
The social control which is achieved through law is radically 
different from that which is achieved by official discretion and 
command. If, for example, the law regulating inheritances, 
contracts, corporations, property, bankruptcy, were made uni- 
form throughout the United States, it would not mean that any 
public official had any more power than he has to-day to dispose 
of the lives and possessions of the people. It would mean 
that throughout the United States all individuals and associa- 
tions transacted their affairs with one another under the same 
rules. There would be a high degree of uniformity in the 
law, but there would be no aggrandizement of the executive. 
If, however, the executive is given the authority to own and 
manage property, to make the contracts, to direct the corpora- 
tions, then in place of uniform and equal laws there is central- 
ized government for particular ends. 

But in ordinary debate uniformity of law is continually identi- 
fied with centralization of government. It is very confusing. 
Men who really want the social control which adequate laws 
would provide find themselves agreeing to the aggrandizement 
of a centralized bureaucracy. And men who know the evils 


of absolutism find themselves opposing social control through 
more adequate laws. This is a false dilemma. It is necessary 
to have the same rules for all who wish to play whist But it 
is not necessary that the Whist Club, which legislates on the 
subject, should tell every player what card to play. The pi- 
oneers of liberalism in England understood this distinction very 
well: they were the great promoters of national union under a 
common law and of international peace under international kw. 
They believed that the same rules of justice should govern men's 
transactions everywhere, and they broke down the particularism 
of petty principalities, guilds, "monopolies, and the mercantilist 
states. But their conception of uniform and equal laws caused 
them to resist not only the particularism of little sovereignties 
but the aggrandizement of big sovereigns. 

Thus they supported the king as against the feudal barons 
because they could get wider and more equal justice in the courts 
of the king. They did not mean, however, to invest the national 
king with all the vexatious prerogatives of the feudal barons. 
So they cut off one king's head and exiled another king in order 
to make it plain that the business of the sovereign was to 
provide justice under the law and not to command his subjects 
by the exercise of the royal prerogative. The founders of the 
American Republic understood the distinction. When they 
came to enumerate the powers entrusted to the federal govern- 
ment and the powers denied to the separate states, they were 
guided by this principle. For though it is sometimes said that 
they reserved to the separate states all the authority which they 
did not specifically grant to the federal government, this is a 
misunderstanding of what they did. They also denied to the 
separate states the authority to make laws which would inter- 
fere with the freedom of commerce within the nation, and by 
that proviso they showed that they intended that a common law 


should prevail/ What they did not intend was that the federal 
government should administer many of the affairs of the people. 
They remembered that authority is voracious. And so they 
enumerated carefully the affairs that the government might 

Being liberals, they were in favor of the extension of a com- 
mon law and opposed to the aggrandizement of the government. 
They understood what their successors have forgotten, that the 
increasing uniformity of equal laws is not only not the same 
thing as the centralization of government, but is, in fact, its 

3. The Civil Society 

We have only to look about us to find the confirmation of 
this truth. In that part of the contemporary world where the 
authoritarian system has not yet been established, men living 
under separate national governments think of themselves as 
living under essentially the same rules of law. Thus Eng- 
lishmen, Frenchmen, Americans, Danes, Swedes, Norwegians, 
Swiss, Dutchmen, Argentinians, act on the assumption that they 
are members of the same civilized society: they transact their 
affairs under laws which are not identical but are fundamentally 
similar, and in important matters are administered impartially 
to citizens and aliens alike. But when they cross the frontiers 
of a totalitarian state, they leave the region of common laws 
and enter closed compartments where official discretion is the 
only rule.* Here discrimination, administrative arbitrariness, 

9 Under this system the colonies achieved national union. But ,it was a 
precarious union as long as the status of labor was not uniform throughout the 
nation. Thus slavery caused a civil war and the national disunion was healed 
only by abolishing the "peculiar institution," thus giving to all labor, at least 
theoretically, the same legal rights. 

6 Cf . C. H. Mcllwain's "Government by Law," Fortig* Afmrt, Vol. XIV, 
No. 2, Jan. 1936. 


and the absence of equality or certainty in the law are proudly 
proclaimed as a new dispensation. It is no accident that in the 
region of common law the separate nations live at peace with 
their neighbors, but that whenever the boundaries of this region 
run with the boundaries of authority, men arm themselves in a 
warlike mood. 7 

In the end no nation can fail to enter this system where com- 
mon law prevails: if it is backward, unable or unwilling to make 
its portion of the earth secure for the new economy of the di- 
vision of labor, its certain destiny is to be conquered.* Unless 
it is as remote as Tibet, in one way or another it will be brought 
within the necessary jurisdiction of the Great Society. Nor 
can any portion of the earth permanently secede from the so- 
ciety of common law: in the end the rebellion will be overcome. 
For the necessity of common laws throughout the world econ- 
omy is the necessity of all the multitudes of mankind in all 
their daily transactions, and its cumulative force is invincible. 

This necessity is, it seems to me, the true explanation of the 
rise and fall of modern empires. It is a phenomenon about 
which the nineteenth century was confused both in practice and 
in theory, and we have inherited the confusion. The promoters 
and the critics of imperialism have usually failed to distinguish 
between the movement which opened all the continents to a 
world-wide division of labor and the antagonistic and parasitical 
imperialism by which special interests within separate nations 
sought to preempt and exploit undeveloped regions of the 

It is easy enough to see why these two contradicting move- 
ments should have been lumped together as "imperialism.' 1 
For the movement to open the world and make it safe for trade 
and investment has been continually entangled with the con- 

1 Cf . Hamilton Fish Armstrong's We or Tfoy. 
8 Cf. my Stabs of Diplomacy. 


trary movement to preempt opportunity by closing the doors. 
The concessionaires and bankers, the adventurers and exploiters, 
the militarists and bureaucrats, who took the lead in opening the 
door of backward countries were readily tempted to close the 
doors once they were inside. 

But while the two opposite movements have been confused 
and their differences obscured by hypocrisy, the course of mod- 
ern history is not intelligible until they have been differentiated. 
Though their work has been stained with blood, cruelty, and 
injustice, the men who open the world to economic development 
are completing the work of the explorers who set forth at the 
end of the fifteenth century. Men like Andrew Jackson and 
Cecil Rhodes and Lord Cromer and Elihu Root carried on what 
Columbus and Magellan began. By advancing the regime of 
law and order throughout the globe, they have facilitated the 
world-wide division of labor and a stupendous improvement in 
the standard of life. 

The net effect has been to multiply beyond all precedent the 
number of self-governing peoples. For while empires have 
been conquered by imperialists, though favored concessionaires 
collected the initial profits, there is no permanent empire in 
the Great Society. Within a relatively short time, as measured 
by the life of a people, the growing prosperity under law and 
order calls into being independent nations which cast off their 
subservience to the mother country and acquire the strength to 
resist exploitation. Thus British imperialists once held North 
America; the legatees are the United States and the Dominion 
of Canada. They conquered South Africa, and within a short 
time their colony has become an autonomous nation. Spain 
conquered South and Central America: her empire is the seat 
of twenty Latin- American republics. The British conquered 
India and Egypt. The United States conquered the Philip- 
pines. These empires are in liquidation. 


Thus preemptive imperialism, the policy of the closed door, 
the attempt to make colonies a field of exploitation for special 
interests, must be regarded as a pathological disease, a reaction- 
ary but transient phenomenon, which has accompanied the pro- 
gressive movement to open the planet to settlement and to a 
world-wide division of labor. It is perfectly true, as Marxian 
socialists contend, that the capitalist system had to expand all 
over the world j it is true that it has accomplished its expansion 
by imperialism. But the socialists are demonstrably wrong in 
thinking that what capitalism needed was closed colonies to be 
exploited for huge profit by capitalists with excess savings. 9 
That is merely what some capitalists hoped. What capitalism 
as a whole has needed was security and equal opportunity for 
the division of labor. 

That this is the truth of the matter is evident from the fact 
that only a small fraction of the capital exported by the creditor 
empires has been invested in their subject territories. The 
greater bulk of it has gone to independent foreign countries 
and to self-governing dominions: it has gone not to the ter- 
ritories that could be exploited because the empire had political 
supremacy but to those where commerce flourished and prop- 
erty was secure. Thus there has indeed been enormous pres- 
sure from the capitalists to open territories to trade and invest- 
ment and to establish law and order. But while this pressure 
may have been initiated by concession hunters, the sustaining 
motive to political expansion has been the need to overcome the 
disorder and insecurity which interrupt trade and imperil in- 
vestments. Thus no one has planned the conquest of Holland 
or of Scandinavia, and Mexico has been in peril only when it 
was in disorder. 

Cf. J. A. Hobson's Imperialism, Part I, Ch. VI, "The Economic Taproot 
of Imperialism." Mr. Hobson is not a Marxian socialist but an English 
radical. His analysis has, however, been adopted by modern Marxian 
socialists. Cf., e.g., Laski's The State in Theory and Practice, Ch. III. 


The regime of peace is coterminous with the organized com- 
munities in which governments and individuals live under equal 
laws. The region of common law is the pacified region of the 
globe. Within it big states and little ones, creditor and debtor 
nations, "Haves" and "Have-Nots," exist together in peace and 
are drawn together for the defense of their peace. 

The United Kingdom, for example, belong to the Have- 
Notsj it does not have the natural resources with which to feed 
its people or to supply its factories with raw materials. Does 
it obtain the food and materials it needs by the power of its 
navy and the might of its empire? Not at all : the people of the 
United Kingdom buy what they need from "their" dominions 
and colonies at prices fixed in world markets. They do not 
take what they need as conquerors exact tribute. They are able 
to obtain their supplies because they can buy and sell in markets 
where there are common laws and usages regulating contracts, 
and promises to pay, and the media of payment, and weights and 
measures, and titles to property. It is utterly naive, the un- 
tutored delusion of a primitive mind, to suppose that the United 
Kingdom lives by exploiting its empire. There may be indi- 
vidual Britons who make fat profits from special privileges 
under the segis of empire. But the British people live suc- 
cessfully in a condition of deep interdependence with the 
outer world only because in a large portion of the world the 
security of transactions is protected by law and can be relied 

Among the nations that have entered into the regime of a 
common law there is peace. It does not depend upon their 
size, their navies, their forts, their diplomatic status as Great 
Powers or Neutrals. The United States is ten times as great 
a military power as Canada but the frontier between the two 
nations is profoundly pacific. That is not because the two 
peoples speak the same language or are predominantly of the 


same ethnic stock: Germany and Austria speak the same language 
and are of the same ethnic stock. It is because Canada and the 
United States live under the same regime of law not under 
identical laws, but under the same conception of law as equal for 
all and above all equally. -There is no problem of the relative 
size of armaments, no need for promises of nonaggression, as 
between Canada and the United States, or between Great Britain 
and the Netherlands, or France and Belgium, between Britain 
or America and France. These nations are positively at peace 
with one another. They are not merely restrained from waging 
war against one another. And the substance of that peace is that 
they have become, by the evolution of events over two centuries 
or more, members of the same civil society. 

The troubled and troublesome areas of the world are those 
where this civil society is not yet established. Thus the weak 
and disorderly states are vulnerable because they are unable as 
yet to participate in this world-wide civil society which. main- 
tains thd world-wide division of labor. They have no real 
independence because the condition of independence is the ca- 
pacity to provide the minimum standards of law and order which 
the Great Society requires. So the backward state is subject to 
continual foreign intervention, and to the risk of conquest. 
Whereas the weak and disorderly state is vulnerable, the strong 
but lawless state is predatory. It, too, has not acquired the 
habit of civilian life in a regime of law; it has not yet reached 
that political maturity which the peaceable order requires. -And 
just as the backwardness of weak states provokes intervention 
which continues until they have entered the civil society, so the 
backwardness of strong states provokes leagues of defense against 
their aggression. For by one means or another, as their inter- 
dependence increases, all the peoples of the earth are destined 
to come under a common law. 

Thus peace is not to be conceived as something to be im- 



posed by a supreme world authority operated by a Parliament 
of Man. It is to be conceived as the consequence of an in- 
creasing acceptance throughout the world of the inner princi- 
ples of a common law which all the various parliaments rep- 
resenting the separate communities of mankind respect and 
adapt to the variety of their conditions. To conceive of peace 
as based on one identical statute book enacted for all the world 
by one supremd legislature is to imagine the impossible and to 
seek what no one would in fact desire. r The inverse is the true 
conception. It is that all the statute books of all the parlia- 
ments shall have as their minor premise the diverse needs and 
notions of the separate peoples, but as their major premise the 
same conception of the supremacy of equal law. 

4. The Ideals of the Great Revolution 

The common law which the free and peaceable nations have 
partially achieved is not the product of noble sentiments about 
equal and certain laws. The sentiments are, indeed, noble. 
But they are noble, not as Don Quixote's sentiments were noble, 
but because they express the highest promise of the deepest 
necessity of these times. For another age it may well be that 
other sentiments will be nobler because they are more ap- 
propriate: among the warring city-states of the ancient world, 
it may well be that Plato discerned the highest promise of their 
necessity in the rule of a privileged but self-denying caste. 

The ideal of equal and certain laws is hardly conceivable in 
an age of small, self-sufficient communities, and it would cer- 
tainly have been unrealizable. The ideal has taken root gradu- 
ally in the minds of men as they found the need of rational 
principles to express their real needs. It is in fact the necessary 
consequence of the industrial revolution. It reflects that rev- 
olution. It has developed with the progress of that revolution. 
It was formulated by. men who have lived in the midst of it, 


and has been applied by men who found that they had to apply 
it. For the conception of equal and certain laws is the political 
corollary of the division of labor. 

The method of social control by defining, adjudicating, and 
amending reciprocal rights and duties, rather than by authori- 
tative commandments, is the legal framework evolved by men 
who have become interdependent by exchanging specialized 
work in widening markets. Because they live by an economy 
which can be regulated only by markets, they are compelled to 
resist overhead direction by coercive political planners. They 
are compelled by their practical necessities to bring the sovereign 
government itself under equal and certain laws. They find 
they must have equal and certain laws so that men, though they 
never see each other, can count upon the behavior of others. 

So it is no accident that the division of labor, common laws, 
the ideals of equal justice, the restraint of prerogative and 
privilege, the conception of international law and of peace as 
the paramount policy of states, should all have evolved to- 
gether in the same regions of the earth. They are merely 
different aspects of the same momentous change in which men 
have been passing out of their primitive self-sufficiency into the 
intricate interdependence of the Great Society. 

Ever since the earliest beginnings of the industrial revolution 
men have been advancing the frontiers of the region in which 
dependable law exists, making the world habitable for men 
who live by the division of labor. This movement, known to 
doctrine as liberalism, has behind it the irresistible energy de- 
veloped by an immeasurably superior mode of obtaining a 
living from the earth, and no human power can long withstand 
it. Though men fall back into reaction, and have to fight their 
way out of it through bitter and bloody strife, yet at long last 
they will be free under equal laws because in no other way can 
they prosper, or even survive, in the economy by which they 
are destined to live. 



/. Lawless Legality 

THROUGHOUT this book I have maintained that the active con- 
tenders for power in the modern world are engaged in an in- 
decisive, and, therefore, an incessant struggle for supremacy 
because at bottom they all believe the same thing: that by the 
exercise of their own unlimited authority they can make them- 
selves secure and that by the coercive direction of human 
affairs they can shape the destiny of great societies. 

Their essential principle becomes visible when we look be- 
neath their intentions and their promises for the future to their 
claims for power in the present. We then begin to see that 
while the warring factions propose to use power for very dif- 
ferent ends, each seeks absolute power to achieve its own ends. 
That the dictators and oligarchs of the totalitarian states insist 
upon absolute power is, of course, self-evident. They assert 
the unqualified right to command the life and labor, and to dis- 
pose of the property, of all who are within reach of their power. 
There is no law to which their subjects can appeal as against the 
decisions of the masters 5 in so far as any legal rights have been 
assigned to their subjects, there are no tribunals which can be 
relied upon to enforce these rights when, in the opinion of the 
rulers, the interests of the state are involved. Though in prac- 
tice the gradual collectivists are more moderate^ yet the same 
principle is implicit to their claim that popular majorities, or 
even pluralities, must legislate without restraint. Absolutism 


is no less the principle invoked by those who insist that the rights 
of property, of contract, and of business corporations are founded 
upon superior natural right which must not be interfered with. 
The same principle is asserted by organized labor wherever it 
claims the right to paralyze the life of a community by the stop- 
page of essential services. And it is, of course, the principle of 
aggressive nationalism^ when it holds that no law can bind a 
nation seeking its place in the sun. 

The recognition that the chief partisans make the same funda- 
mental assumptions has been for me at least a necessary and 
decisive clarification. It has brought me to the realization that 
however bitterly they may fight each other, they are all in re- 
bellion against the moral heritage of western society, and that 
upon the foundations of that heritage men must make their stand 
against another relapse into barbarism. I am not oblivious of 
the differences which distinguish the embattled communists, 
fascists, conservative nationalists, and gradual collect! vists; I 
realize the existence of sub-species: that there is a Second Inter- 
national, a Third under Stalin, and a Fourth under Trotzkyj 
that Italian fascism and German national socialism have a 
somewhat different complexion; that Old Guard Republican- 
ism in the United States, with its patronage of corporate col- 
lectivism, serves other interests than the collectivism of the 
New Deal. There are also important differences between 
lions and tigers, even between African and Indian lions. But 
from the point of view of, let us say, a goat or a lamb, the 
common characteristics of all the great carnivores are more 
significant than their differences. 

Thus in treating the contemporary contenders for power as 
members of the same genus I do not deny that, like the Capulets 
and the Montagues, they fight sincerely and furiously. It is 
obvious enough that they are locked in a struggle in which their 


fortunes and their hopes, often their very lives, are at stake. 
But I do claim that they have committed their purposes to the 
same ultimate idea of human relations, and that under the do- 
minion of this idea they are doomed to a perpetual struggle 
which can be ended only as men call down a plague on all their 
houses, and reassert as against all the fractious partisans the 
principles which they all deny. 

It is upon their common claims to absolute power that we must 
fix our attention. For the assertion of these claims provokes 
the actual struggles in which contemporary men are engaged. 
We must note particularly that the only limitation or control 
upon power which any of the partisans is willing to recognize 
is that he will confer benefits in the future. The big business- 
men argue that if they have their own way they will make the 
country prosperous; the fascists that they will make their people 
strong and glorious; the socialists that they will plan and pro- 
vide for the welfare of all. "Give us power," they cry, "and 
see what good will come of it." The end, they tell us, will 
justify the means. So men are asked to choose among con- 
flicting promises about an unpredictable future and, in the light 
of these promises, to assent to the exercise of unlimited power. 

The struggle to determine who. shall exercise unlimited 
power is the turbulence of this modern world, and the inde- 
terminateness of the promises is its moral and intellectual con- 
fusion. One man's promises are as good as another's; power 
controlled by guesses about the future, not by rules of law in 
the present, is arbitrary. So we must fix our attention upon 
the radical lawlessness of the contending factions and we must 
not let ourselves be misled by the fact that they employ lawyers, 
or use the machinery of the state, or enact duly engrossed 
statutes, and are careful to act in the forms of law. There is 
such a thing as lawless legality and it is to be found where men 


2. The Intimation of Law 

The conviction that there is a higher law, higher than 
statutes, ordinances, and usages, is to be found among all civ- 
ilized peoples. It springs from a dim apprehension which 
mankind is forever perceiving, and then losing, and then seek- 
ing to rediscover and repossess. For at least twenty-five cen- 
turies men have been formulating it. They have stated it in 
a thousand different ways. They have debated it since they 
learned to debate general ideas. Usually the conception of a 
higher law has been denied by the masters and invoked by their 
subjects. For the belief in a higher law is in effect a prayer 
invoking against the material powers of an actual ruler some 
immaterial power which he can be compelled to respect} it 
imputes to the nature of things universal principles of order to 
which human caprice can be held accountable. 

Though the existence of any such higher law in human so- 
cieties is constantly repudiated in practice and is even condemned 
in theory, it derives from an intuition which mankind is unable 
to abandon. For if there is no higher law, then there is no 
ground on which anyone can challenge the power of the strong 
to exploit the weak, there is no reason by which arbitrary force 
can be restrained. So it is no mere coincidence that from the 
time when the Stoics first challenged human slavery, down 
through the long struggle for constitutional government, for 
the rights of man, and for the freedom of trade, the emanci- 
pators of mankind have invariably appealed to some higher and 
more universal law than the enacted will of their adversaries. 
Upon the acknowledgment of a higher law rests whatever 
power constitutions, treaties, and engagements may have to bind 
the stronger party. In the absence of a higher law there can 
be tyranny and there can be anarchy, there can be periods when 
the ruling power is irresistible and others when rebellion is so 


general that no power can prevail. But a free and ordered so- 
ciety, resting chiefly on persuasion rather than on coercion, on 
the pacific adjudication of human conflicts, on the security of 
known rights and duties, and on their revision, is inconceivable 
in theory and unworkable in practice unless in the community 
there is a general willingness to be bound by the spirit of a law 
that is higher and more universal than the letter of particular 

But in the nineteenth century, as we have already seen/ the 
defenders of vested interests appropriated the conception of a 
higher law and identified it with their privileges. They were 
challenged by men who denied that there was such a thing as 
the spirit of law above and beyond the letter of the statutes and 
judicial decisions. The idea was attacked by a formidable ar- 
ray of philosophers from Bentham to Pareto, and the restraints 
it imposes on speculation and on action have come to be thought 
of as naTve and old-fashioned. What, they asked, is this higher 
law? To whom has it been revealed? What are its cre- 
dentials, its sanctions, and its authority? These questions were 
raised by Jeremy Bentham in 1776, as it happens, in the very 
year when the American colonists declared their independence 
by appealing to "the Laws of Nature and of Nature's God," 
in the very year too when Adam Smith published TJie Wealth 
of Nations, advocating "the obvious and simple system of 
natural liberty." To Bentham the appeal to a higher law by 
which governments were limited was 

but womanish scolding and childish altercation, which is sure to 
irritate and which never can persuade, "/ say, that the legislature 
cannot do this / say it can. I say that to do this, exceeds the 
bounds of its authority / say, it does not" It is evident, that a 
pair of disputants setting out in this manner, may go on perplexing 
and irritating one another for everlasting, without the smallest chance 

4 Cf. Bk. III. 


2. The Intimation of Law 

The conviction that there is a higher law, higher than 
statutes, ordinances, and usages, is to be found among all civ- 
ilized peoples. It springs from a dim apprehension which 
mankind is forever perceiving, and then losing, and then seek- 
ing to rediscover and repossess. For at least twenty-five cen- 
turies men have been formulating it. They have stated it in 
a thousand different ways. They have debated it since they 
learned to debate general ideas. Usually the conception of a 
higher law has been denied by the masters and invoked by their 
subjects. For the belief in a higher law is in effect a prayer 
invoking against the material powers of an actual ruler some 
immaterial power which he can be compelled to respect} it 
imputes to the nature of things universal principles of order to 
which human caprice can be held accountable. 

Though the existence of any such higher law in human so- 
cieties is constantly repudiated in practice and is even condemned 
in theory, it derives from an intuition which mankind is unable 
to abandon. For if there is no higher law, then there is no 
ground on which anyone can challenge the power of the strong 
to exploit the weak, there is no reason by which arbitrary force 
can be restrained. So it is no mere coincidence that from the 
time when the Stoics first challenged human slavery, down 
through the long struggle for constitutional government, for 
the rights of man, and for the freedom of trade, the emanci- 
pators of mankind have invariably appealed to some higher and 
more universal law than the enacted will of their adversaries. 
Upon the acknowledgment of a higher law rests whatever 
power constitutions, treaties, and engagements may have to bind 
the stronger party. In the absence of a higher law there can 
be tyranny and there can be anarchy, there can be periods when 
the ruling power is irresistible and others when rebellion is so 


general that no power can prevail. But a free and ordered so- 
ciety, resting chiefly on persuasion rather than on coercion, on 
the pacific adjudication of human conflicts, on the security of 
known rights and duties, and on their revision, is inconceivable 
in theory and unworkable in practice \mless in the community 
there is a general willingness to be bound by the spirit of a law 
that is higher and more universal than the letter of particular 

But in the nineteenth century, as we have already seen, 4 the 
defenders of vested interests appropriated the conception of a 
higher law and identified it with their privileges. They were 
challenged by men who denied that there was such a thing as 
the spirit of law above and beyond the letter of the statutes and 
judicial decisions. The idea was attacked by a formidable ar- 
ray of philosophers from Bentham to Pareto, and the restraints 
it imposes on speculation and on action have come to be thought 
of as naive and old-fashioned. What, they asked, is this higher 
law? To whom has it been revealed? What are its cre- 
dentials, its sanctions, and its authority? These questions were 
raised by Jeremy Bentham in 1776, as it happens, in the very 
year when the American colonists declared their independence 
by appealing to "the Laws of Nature and of Nature's God," 
in the very year too when Adam Smith published TJie Wealth 
of Nations, advocating "the obvious and simple system of 
natural liberty." To Bentham the appeal' to a higher law by 
which governments were limited was 

but womanish scolding and childish altercation, which is sure to 
irritate and which never can persuade, "/ say, that the legislature 
cannot do this / say it can. I say that to do this, exceeds the 
bounds of its authority / say, it does not" It is evident, that a 
pair of disputants setting out in this manner, may go on perplexing 
and irritating one another for everlasting, without the smallest chance 

*Cf. Bk. III. 


of ever coming to an agreement. It is no more than announcing, and 
that in an obscure and at the same time, a peremptory and captious 
manner, their opposite persuasions, or rather affections, on a question 
of which neither of them sets himself to discuss the grounds* 

More than a hundred years later Pareto, 6 in much the same 
mood of irritated rationalism, declared that theories of natural 
law and the law of nations "are another excellent example of 
discussion destitute of all exactness." He reviews various at- 
tempts from Cicero to Grotius to formulate a higher law to 
which humansjactibn ought to correspond. 

The law of nations [he exclaims] is declared to be imposed 'by 
natural reason. This natural reason is a beautiful creature to whom 
one may resort in distressing predicaments and use to demonstrate 
many fine things. It is also called right reason, true reason, just, 
honest reason, and the like. It is not explained how the reason 
worthy of these exalted epithets is to be distinguished from the reason 
which has to go without them. But at bottom the former is always 
the one that meets the approval of the writer who bestows the lauda- 
tory epithet. 7 

The irritation of Bentham and of his successors, who have 
attacked the conception of a higher law, has had plenty of prac- 
tical provocation. For, time and again, when the vested rights 
of property were concerned, the letter of the existing law with 
all its injustices has been held to be the immutable expression 
of the spirit of the higher law. So, in order to reform the in- 
justices, men have felt they had to break down the authority of 
the higher law. But in fact the reformers fell into the same 
error as the defenders of vested rights: for the reformers were 
insisting that the letter of the new laws must be the highest 
authority on earth and the conservatives that the letter of the 

5 A Fragment on Government, pp.- 1 26-27. 

6 Of. cit., Vol. I, Sec. 401, p. 245 et seq. 
'Ibid., Sec. 422, p. 252. 


old laws was the highestauthority on earth. Between the will 
of the reformers and the will of the conservatives there was 
thus no mediating standard. The conservatives, by identify- 
ing the higher law with their vested rights, tried to raise their 
own interests above criticism and challenge. The reformers, 
by denying a higher law, made their own impulses the highest 

Because men have abused and perverted a truth is no reason 
for abandoning it. If, as we were taught by so many thinkers 
of the nineteenth century, the belief in a higher law is a mixture 
of sentimentality, superstition, and unconscious rationalization 
of private interest, then the state of affairs into which we have 
sunk is the only possible one. We must give up the hope of an 
ordered civilization on this planet and resign ourselves to an 
interminable struggle for existence in a war of all against all. 
But surely it is philistinism and pedantry to dismiss the con- 
ception of a higher law because the formulations are vague and 
confusing, or because the conception has been grossly exploited. 
We are not so full of wisdom, and so comfortably masters of 
our fate, that we c&n afford summarily to reject the underlying 
conception upon which so many sages and saints and heroic 
leaders have based their hope of a happily ordered exist- 

The company of the witnesses to the idea is a great one: 
Aristotle and the Stoics, Aquinas and Grotius, the founders of 
English constitutional government, the creators of the Amer- 
ican Republic. They are not to be dismissed out of hand as 
men who indulged in "womanish scolding and childish alterca- 
tion." Granted that they put their intuitions into words which 
the modern dialectician can riddle, it may still be that the in- 
tuition, upon which they all relied, is an insight into the depths 
of the human condition; that, however imperfectly it may have 
been formulated, it represents a groping of the human spirit ex- 


pressing itself in successive rough approximations of the truth. 
We must remember th^t the whole truth has not yet been fully 
revealed. The truth is only partially revealed, and the per- 
sistent search by the noblest men of our civilization for a 
higher law which would bind and overcome the arbitrariness of 
their lords and masters, of mobs at home and barbarians abroad, 
and the vagrant willfulness of their own spirits, is too impressive 
to be lightly disregarded. 

3. Classic Examples 

We can perhaps make clear to ourselves the spirit of the 
higher law by examining one or two specific instances where it 
has been successfully invoked. 

In 1612 King James I summoned the judges of England to 
appear before him. 8 The Church had set up an administrative 
tribunal for the regulation of its affairs. This tribunal, which 
was unknown to the English common law, had reached out to 
deal with temporal matters and with lay offenders. It rendered 
its decisions by no fixed rules. They were ^subject to no ap- 
peal. When the tribunal attempted to arrest a lay offender, 
the Court of Common Pleas stopped the proceedings with a writ 
of prohibition. 

The King then declared that he might take away from the 
common-law judges any cause he pleased and decide it himself, 
and at the conference to which the judges had been summoned 
this view of the royal prerogative was expounded. The Arch- 
bishop of Canterbury argued that the judges were merely the 
delegates of the King, and that, therefore, the King could judge 

8 The account of this incident is taken from Roscoe Pound, of. fit., p. 60. 
I have condensed and paraphrased Dean Pound's text, omitting quotation 
marks for the sake of typographical lucidity. For the original source see 
Coke's own report of the conference in Pound and Plucknett, of. cit. % 
pp. 185-87. 


causes which were usually left to his delegates. To this the 
great Coke, the Chief Justice, replied on behalf of the judges 
that "by the law of England the King in person could not judge 
any cause; all cases, civil and criminal, were to be determined 
in some court of justice according to the law and custom of the 
realm." The King then said that he "thought law was founded 
upon reason, and I and others have reason as well as the judges." 

To this Coke made a response which is pregnant with great 
significance. "True it was," he said, "that God had endowed 
his Majesty with excellent science and great endowments of 
nature; but his Majesty was not learned in the laws of his 
realm of England, and causes which concern the life or inher- 
itance or goods or fortunes of his subjects are not to be decided 
by natural reason, but by the artificial reason and judgment of 
the law, which law is an art which requires long study and 
experience before that a man^can attain to the cognizance of it." 

At this the King was much offended, saying that in such case 
he should be under the law, which it was treason to affirm. 
Coke answered that the King ought not to be under any man, 
but that the King was "under God and the law." 

This conference between the King and the judges is of his- 
toric importance because it marks the opening of that great 
struggle'with the Stuarts in which the lawful rights of English- 
men were vindicated as against arbitrary action under the royal 
prerogative. We must note particularly that the law which 
Coke said was above the King was not an abstract formula, but 
the common law of England interpreted in English courts. 
This law was not a series of commandments promulgated by the 
sovereign. It was the product of the gradual judicial develop- 
ment of immemorial usage through the derisions of specific 
controversies under an established procedure. That is what 
Coke meant by objecting to "natural reason" that is, the 
King's own opinion. The common law, he insisted, had come 



out of something very different from the fiats of any man, and 
so it was to be regarded not as the product of a lawgiver, but 
as the deposit of progressive discovery of law in the very nature 
of things. No 'doubt if the exact history were known in all 
its detail, it would be evident that every rule in the law had its 
origin in some human decision. But because no one man or 
set of men made the whole law, the law was felt to be trans- 
personal, to override the ordinary human will, even of the 
King, and to establish rights and duties for all men founded 
upon something besides the will of any man. Because it was 
detailed and specific, the common law provided a measurable 
security for their lives, their inheritances, their goods, their for- 
tunes, against sudden and arbitrary changes in the lawj because 
it could not be altered by fiat, it gave them freedom from the 
exercise of arbitrary power. Thus Coke could find the as- 
surance to say to the King that there existed a law and custom 
of the realm which was higher than the royal prerogative. 

We have here a classic example of what I have ventured to 
call a rough approximation to the formulation of a higher law. 

We must not let ourselves be confused by the realization that 
the English common law of the seventeenth century was full 
of cruelty and injustice. The essential point is not whether 
the common law conformed to the dictates of the highest moral 
insight of mankind. It obviously did not. The essential 
point is that Coke and his supporters had arrived at the con- 
ception of a law governing human affairs which does not origi- 
nate in the arbitrary fiat of the sovereign. 

We can, I think, elucidate the conception further by consider- 
ing one of the decisive achievements of modern times, the per- 
fecting of the writ of habeas corpus. 

During the reign of James I a dispute arose between the 
Commons and the Crown over whether the King could, with- 
out consulting Parliament, raise the customs duties on imports. 


In the year 1622 the Commons declared that as English sub- 
jects they inherited the right to debate their grievances and 
that members could not be imprisoned for what they said. But 
"King James tore the protest out of the Journal with his own 
hand, dissolved Parliament, and imprisoned several leading 
members, including Pym, Selden and Coke. The warrant for 
the imprisonment, signed by five of the Privy Council, directe4 
their committal to the Tower, *f or certain reasons of state known 
unto his Majesty.' " * His successor, Charles I, continued the 
practice of committing men to the Tower for reasons of state 
Iqnown only to His Majesty; in the most important instance his 
reason of state was that certain of the Puritan gentry had re- 
fused, without a vote of Parliament, to give him money for his 
foreign war. In 1627 Sir Thomas Darnel and four other 
knights were imprisoned for refusing the money. They applied 
to a court for writs of habeas corpus. The court grantecl the 
writs, directing the warden of the jail to produce his prisoners 
and to state why they were imprisoned so that the court might 
decide whether they were lawfully imprisoned. Henry Liloe, 
the warden, did produce them and replied that he was holding 
them "by the special command of His Majesty." 

The case, known as Darnel's Case, was argued by one of the 
greatest English lawyers, John Selden. "The main question 
to which he addressed himself was whether an English freeman 
could be lawfully imprisoned by the special command of the 
King or his Council without any other cause than the will of the 
King being stated" 10 Selden argued that since Magna Carta 
it was one of "the ancient laws and privileges of this realm' 1 
that "no freeman whatsoever ought to be imprisoned but ac- 
cording to the law of the land." 

He lost his case, for the Chief Justice decided "that the 

9 Francis W. Hirst, Liberty and Tyranny, p. 46. 
"Ibid., pp. 48-50. 


special command of the King was a sufficient return to the writ 
of habeas corpus, that no other cause need be shown." But 
fifty years later, after Charles I had lost his head, after the 
Cromwellian revolution and the Restoration, Parliament passed 
and the King agreed to the Habeas Corpus Act (1679) under 
which <c no freeman ought to be committed or detained in prison 
by command of the King or Privy Council, or any other, unless 
some cause of the commitment . . . be expressed, for which by 
law he ought to be committed. . . ." n 

4. The Two Modes of Thought 

In this historic controversy the Crown and Parliament em- 
ployed radically different modes of thought. The King's party 
conceived the law as originating in the will of the King, and 
the relation between the King and his subjects as that of the 
master to his slave, the patriarchal father to his children, the 
victor to his vanquished foe. This is an ancient and distinct 
pattern of human thought. It has a logic of its own. It 
might be called the logic of authority or the logic of the su- 
premacy of men over men. In the Petition of Right the law 
is conceived as originating in the nature of things, and the re- 
lation of the King to his subjects, and of each man to other men, 
is thought of as established by impersonal rules binding on 
everyone. This too is an ancient and distinct pattern of human 
thought with a logic of its own. We may call it the logic of 
liberalism or the logic of the supremacy of law over men. 

By these two modes of thought the logic of authority is, 
so to speak, the more instinctive in that it rationalizes the primi- 
tive and persistent impulse to dominate, to submit, to stand in 
awe of power and to seek its protection. The logic of lib- 
eralism, on the other hand, is not instinctive or habitual. And, 

"Hint., of.d*.> p. S3. 


therefore, it is as yet far from being established as a universal 
way of life; it is rather a precarious and tentative thing, like the 
clearing for a garden in the jungle, which has to be tended con* 
tinually if it is not to be quickly submerged in the primeval 
forest. For the logic of liberalism calls for the restraint of 
material power by immaterial powers, and, therefore, for the 
inordinately difficult conquest of man's lower nature by his 
higher nature. 

There is an immeasurable difference between these two modes 
of dealing with human experience, and until that difference has 
been thoroughly explored, the more primitive logic of authority 
will tend to prevail in' all periods of perplexity and danger. 
The truth of the matter is that the logic of liberalism is as yet 
too rudimentary and inadequate to provide a sufficient mastery 
of human affairs. We possess it in about the same sense as 
Roger Bacon and William Ockham possessed the logic of ex- 
perimental science. We have a general intuition of the pos- 
sibilities of freedom through law j we have certain practical dem- 
onstrations in the history of free nations. But the whole mode 
of thought is not fully explored, or completely implemented, 
and it is unfamiliar and uncongenial to the natural man. 

So the promise of liberty to mankind will be unrealized and 
continually frustrated until the logic of liberalism has been 
much perfected. We can see the promise, as Francis Bacon in 
The New Atlantis could see the promise of the physical sci- 
ences. But we cannot proceed fast or far from promise to per- 
formance until we have really learned the grammar of con- 
stitutionalism, have acquired it as the intuitive habit of our 
minds, as the normal idiom of our behavior. 

No one who appreciates how wide is the gulf which separates 
the two conceptions will imagine that the newer logic of liberty 
can be perfected easily and learned quickly. To think that 
would be to suppose that we can find suddenly that which the 


wisest and best of mankind have sought patiently and per- 
sistently in the twenty-five centuries of our conscious civiliza- 
tion. It is not an easy task nor one which we in our time can 
hope to complete. For it is not concerned with the superficial 
movements of political life but with the formative principle of 
civilized behavior. 

5. The Higher Law 

It will now be profitable, I think, to scrutinize more closely 
the postulates upon which Coke and Selden based their claim 
that the King was under God and the law. For the law which 
they made supreme over the King was the English common law 
developed by the courts out of immemorial custom. Thus 
Selden construed the right affirmed in the Magna Carta that 
"no freeman shall be imprisoned without due course of law" 
as meaning exactly what it said. The villeins, who were bound 
to the soil under feudal law, did not possess this right. They 
could be imprisoned at the will of their lords or of the King, 
and they had nb remedy. 12 

Now obviously if the higher law of the state is simply the 
traditional law as it has evolved in the course of history, to in- 
sist upon its supremacy is to put the living under the dominion 
of the dead, and to deny to them the power to remedy injustice 
and improve their condition. The attack which Bentham made 
upon Blackstone " was the forerunner of the popular hostility 
in the United States to the judges and lawyers who identified the 
English common law not only with the Constitution but with 
the higher law of the Universe, and then opposed the redress 
of grievances. Thus while it was undoubtedly a great achieve- 
ment to bring the King under the English common law, the 
attempt to keep the newly enfranchised people under this same 

" Hint, of. ciL, p. 49. 

18 In the passage cited above from the Fragment on Government. 


traditional law appeared to them what in effect it was an at- 
tempt to deprive them of their right to reform traditional 
privileges and immunities. 

That, as we have already seen, was the reason why the pro- 
gressive thinkers of the nineteenth century rejected the su- 
premacy of law and poured contempt and ridicule upon the 
conception of a higher law. They had found that in practice 
the higher law meant either the traditional law, with all its his- 
toric injustices, or the vague, subjective, and irresponsible fan- 
tasies of doctrinaires agitating the crowd. The traditional law 
was in many vital respects intolerably ijnsuited to the modern 
world. The doctrinaires, when they appealed , to the sup- 
posedly universal law, were observed to be violently unable to 
agree on what it was. Thus the whole conception was lost, and 
by the twentieth century political thinking had ceased to have 
any criteria beyond those of immediate expediency, self- 
assertiveness, and momentary success. 

The rediscovery and the reconstruction of general political 
standards can be carried forward only, I believe, by developing 
the abiding truth of the older liberalism after purging it of 
the defects which destroyed it. The pioneer liberals vindi- 
cated the supremacy of law over the arbitrary power of men. 
That is the abiding truth which we inherit from them. But 
the law which they vindicated was in many respects the mere 
defense of ancient privileges and immunities. Thus they made 
it easy to invoke the supremacy of the law in order to prohibit 
the .improvement of human affairs. In the decadence of lib- 
eralism the conception of higher law was used to defend vested 
rights and obstruct reform. That was its fatal defect and the 
cause of its downfall. But in the debacle there was swept 
away not only the mistaken insistence upon the supremacy of 
the traditional law, but the nobler intuition that liberty and 
human dignity depend upon the supremacy of the spirit of law. 


We can, and I believe that we must, disentangle the general 
theory of. liberalism from its historic identification with the 
common-law rights and privileges and immunities enjoyed by 
Englishmen and Americans in the nineteenth century. When 
Coke told James I that the King was under God and the law, 
the enduring part of the reply is not to be found in any pre- 
tension that the law itself as it happens to be is perfect and 
immutable; that, for example, the lawful right of the lord of 
the manor arbitrarily to imprison the villein is not to be chal- 
lenged. The essential and enduring part of Coke's reply is 
the denial that the King may act arbitrarily. The denial that 
men may be arbitrary in human transactions is the higher law. 

That is the substance of the higher law. That is the spiritual 
essence without which the letter of the law is nothing but the 
formal trappings of vested rights or the ceremonial disguise of 
caprice and willfulness. Constitutional restraints and bills of 
rights, the whole apparatus of responsible government and of an 
independent judiciary, the conception of due process of law 
in courts, in legislatures, among executives, are but the rough 
approximations by which men have sought to exorcise the devil 
of arbitrariness in human relations. Among a people which 
does not try to obey this higher law, no constitution is worth 
the paper it is written on: though they have all the forms of 
liberty, they will not enjoy its substance. The laws depend 
upon moral commitments which could never possibly be ex- 
pressly stated in the laws themselves: upon a level of truthful- 
ness in giving testimony, of reasonableness in argument, of 
trust, confidence, and good faith in transactions; upon a mood 
of disinterestedness and justice, far above anything that the let- 
ter of the law demands. It is not enough that men should be 
as truthful as the laws against perjury require and as reasonable 
as the rules of evidence compel a clever lawyer to be. To 
maintain a constitutional order they must be much more truth- 


fid, reasonable, just, and honorable than the letter of the laws. 
There must be more than legal prohibition against arbitrariness, 
against overreaching, deception, and oppression. There must 
be an habitual, confirmed, and well-nigh intuitive dislike of ar- 
bitrariness; a quick sensitiveness to its manifestations and a spon- 
taneous disapproval and resistance. For only by adhering to 
this unwritten higher law can they make actual law effective 
' or have criteria by which to reform it. 

By this higher law all formal laws and all political behavior 
are judged in civilized societies. When the principle which 
Coke affirmed against the King is recognized, then the privileges 
of the lord of the manor no longer stand impervious to criticism 
and to reform. If the sovereign himself may not act willfully, 
arbitrarily, by personal prerogative, then no one may. His 
ministers may not. The legislature may not. Majorities may 
not. Individuals may not. Crowds may not. The national 
state may not. This law which is the spirit of kw is the 
opposite of an accumulation of old precedents and new fiats. 
By this higher law, that men must not be arbitrary, the old law 
is continually tested and the new law reviewed. 

To those who ask where this higher law is to be found, the 
answer is that it is a progressive discovery of men striving to 
civilize themselves, and that its scope and implications are a 
gradual revelation that is by no means completed. In the be- 
ginning of law men could aim no higher than to keep the peace. 14 
They had made a great advance when the injured man agreed 
to take in vengeance no more than an eye for an eye. They 
advanced further when the dominion of the strong over the 
weak was legalized as caste, and bounds were put on their su- 
perior strength. They advanced still further when the masters 
had duties towards as well as rights over their subjects. The 
advance continued as the rights of the masters were progres- 

u Cf. Pound, of. <**., p. 85. 


sively checked and liquidated as having no intrinsic justifica- 

The development of human rights is simply the expression 
of the higher law that men shall not deal arbitrarily with one 
another. Human rights do not mean, as some confused indi- 
vidualists have supposed, that there are certain sterile areas 
where men collectively may not deal at all with men indi- 
vidually. We are in truth members of one another, and a 
philosophy which seeks to differentiate the community from 
the persons who belong to it, treating them as if they were dis- 
tinct sovereignties having only diplomatic relations, is contrary 
to fact and can lead only to moral bewilderment. The rights 
of man are not the rights of Robinson Crusoe before his man 
Friday appeared. They stem from the right not to be dealt 
with arbitrarily by anyone else, and the inescapable corollary 
of the rights of man is the duty of man not to deal arbitrarily 
with others. 

The gradual encroachment of true law upon willfulness 
and caprice is the progress of liberty in human affairs. That 
is how the emancipation of mankind has been begun and must 
be continued. As those who have the power to coerce lose 
the authority to rule by fiat, liberty advances. It advances 
by the continual struggle of men against the possessors of ar- 
bitrary power. 

Thus William the Conqueror had to recognize limitations 
upon his sovereignty when he granted his charter to the city 
of London affirming that the citizen was "worthy of all the laws 
ye were worthy of in King Edward's day." " For more than 
two centuries, says Stimson, Parliament, by refusing to vote 
funds, was occupied with the task of compelling the Norman 
conquerors to recognize the old Anglo-Saxon laws. As a 
consequence, though the laws bore, and still bear, the legend, 

M Cited in Stimson, of. cit., p. 24. 


"Le Roy le veult," in fact legislation originated in Parliament 
because the Kings were not strong enough to levy taxes with- 
out the assistance of those represented in Parliament. Because 
Parliament would not levy taxes until its grievances had been 
redressed, it came to be acknowledged that laws could not be 
enacted except "by the common consent of the realm." In 
this gradual substitution of agreed laws for the ipse dixit of the 
King's supremacy the foundations of English constitutional 
liberties were laid. 

At first there were only a few powerful barons who had 
sufficient equality of power to make agreements with the King 
rather than to submit absolutely to his will. Below them 
was a disenfranchised population over whom the great lords 
and the King were in varying degrees absolute. The his- 
torical process of emancipation has consisted in the gradual 
emergence of new classes with sufficient power to resist the 
promulgation of laws by command of their superiors, to insist 
that the laws should issue from transactions among equals. 

Then men began to perceive that the existing law must be 
wrong, that it was arbitrary, in so far as it failed to make in- 
dividuals equal under the law. Thus men discerned a stand- 
ard by which they might judge and reform the laws them- 
selves. The standard was the disestablishment of privilege 
and the organization of human rights. In the deepest slavery 
men are at the absolute disposal of their lord, to be bought and 
sold without recourse, to Be kept alive if he chooses or killed 
if he prefers. Then, perhaps, the former slaves can no 
longer be bought and sold but are bound as serfs to a particular 
land. Then they no longer owe their master the whole produce 
of their labor, but only certain customary dues. As they ad- 
vance in freedom the general subjection of the slave to his 
master is replaced by specific transactions under specific rules. 
It is completed when the former slave and the former master 


deal with one another as equals tinder law and custom and are 
unable and undisposed to take arbitrary advantage of each 

This process of emancipation is a long one. In England? for 
example, not more than three hundred years ago the great mass 
of the agricultural worker^ "had no access to the King's Courts 
against the arbitrary power of their lords." 16 During the 
fourteenth and fifteenth centuries their personal services had 
been in part commuted for fixed cash rentals. But the workers 
had no real security, for in the sixteenth century the land- 
lords, cc after the general rise in prices, began wholesale evic- 
tions of their tenants and increased their rentals." Then 
new courts were set up by the King and the judges restrained 
the landlords by the rule that "a lord could not at his will and 
pleasure change the customs attached to lands held by a par- 
ticular tenure" and a even the customs themselves were re- 
fused recognition if they seemed to the judges oppressive and 

By the early 1600*s, when Coke wrote his Complete Copy 
holder, the emancipation had reached a point where he could 

But now copiholders stand upon a sure ground, now they weigh 
not their Lord's displeasure, they shake not at every suddaine blaste 
of wind, they eate, drinke, and slecpe securely; onely .drawing a 
speciall care of the maine chance to perform carefully what duties 
and services soever their Tenure doth exact, and Custome doth re- 
quire; then let Lord frowne, the Copy holder cares not, knowing him- 
selfe safe and not within any danger, for if the Lord's anger grow to 
expulsion, the Law hath provided severall weapons of remedy; for it is 
at his election either to sue a Subpena or an Action of Trespasse 
against the Lord. Time hath dealt very favorably with Copy holders 
in divers respects." 

"Commons, of. cit., p. 221. 
p. 222. 


Liberty, as Coke describes it in this passage, is no rhetorical 
abstraction, but an array of specific rights against "the Lord's 
displeasure" which the peasant could exercise because the law 
had provided "severall weapons of remedy." A few genera- 
tions earlier, and before the liberty which Coke describes had 
been made effective, the fundamental principle had been grasped 
by some Englishmen by Sir Thomas Smith, for example, 
who was an ambassador, and a secretary to Queen Elizabeth. 
In his book on The Common-wealth of England 1S he says that 
"a bondman or a slave is as it were (saving life and humane 
reason) but the instrument of his Lord, as the axe, the sawe, the 
chessyll and gowge is of the charpenter" and between the mas- 
ter and his slave "there is no mutual Societie or portion, no 
law or pleading between thone and thother . . . there is no 
right, law nor common-wealth compact, but onely the will of 
the Lord and segnior." 

Here, in a valuation of human affairs which proclaims that 
one human being shall not be the instrument of another, shall 
not be a thing like the carpenter's axe or his saw, but shall be 
the member of a mutual society with law and pleading be- 
tween its members in this denial that anyone shall be only 
at "the will of the Lord and segnior," there comes alive the 
conception of a society which is good because it is free. 

18 Cited in Commons, ibid., p. 223, published first as De Refubtica 
Anglorum (1567), and reprinted (1589) under the English title. 



1. A Human Affirmation 

OF the development of liberty we have, however, seen only 
the beginnings: the emancipation even of Englishmen, let 
alone mankind, was not completed in 1 859 when Mill wrote his 
Essay on Liberty. At best the foundation for the advance- 
ment of liberty had been laid in a few countries. But the 
advance itself has no visible end. Always there will remain 
to be liquidated subtler privileges and immunities; always 
there will remain to be checked the refinements of violence, 
fraud, intrigue, and conspiracy by which men bedevil themselves 
and their fellows. The ideal of a society in which all are 
equally free of all arbitrary coercion is a receding goal. From 
each new plateau in the ascent higher levels become visible. 

If we scrutinize the progress of human emancipation, it 
appears to consist largely in a series of restraints upon the 
exercise of power by men over men. The organized liberty 
of mankind is established by laws and usages which seek to 
limit coercive authority, traditional prerogatives, vested rights, 
and all manner of predatory, violent, fraudulent dealing 
among men. 

But though in practice the organization of liberty is achieved 
largely by restraints and denials, these bounds have been set 
upon arbitrary power by men who had to be free, by men who 
would rather have been dead than submit to it any longer. 
Now men have not staked their fortunes and their lives simply 


because it was irrational that their kings and their lords and 
masters should have so much power: the pursuit of liberty 
has not been inspired by a pedantic, a doctrinaire, an ideological 
predilection. Men have rebelled against arbitrary power be- 
cause they collided with it in their work and in the enjoyment 
of their faculties. So while the constitutional -means to liberty 
are in the main a series of negatives raised against the power- 
ful, the pursuit of liberty is a great affirmation inspired by the 
positive energies of the human race. 

Once we have discerned the character of these energies, 
we cannot but recognize that they are inexhaustible and irre- 
sistible. By virtue of these energies mankind will, because 
it must, seek its happiness, not by submitting to providential 
authority but by organizing its liberty. Those energies we 
must affirm once more as we call upon men to resist and over- 
come the great reaction of our times. 

2. The Will to Be Free 

When the Inquisitors summoned Galileo before them, they 
told him he must not find that the earth revolves around the 
sun. Galileo had been observing the heavens through a tele- 
scope: he had become convinced that the evidence warranted 
his conclusion. But the Inquisitors did not look through the 
telescope. They knew all about astronomy from reading the 
Bible. So against Galileo's telescope the Inquisitors employed 
another instrument: the rack. And by the rack, which could 
inflict pain on the astronomer's body, they undertook to cure 
the astronomer of his scientific error. Thus they prohibited 
the exploration of the heavens by the exercise of their physical 

But the rack is not an instrument for exploring the heavens. 
A concentration camp is not a political seminar. Burning men 


at the stake is not a mode of religious revelation. Firing 
squads are not commissions for observing and analyzing the 
economic situation. Censorship is not testimony and argu- 
ment. As regards the intrinsic issues, these exercises of power 
are nothing but senseless interference, sheer brute irrelevance 
like the incursion of a herd of wild asses. What Galileo needed 
was the criticism of other astronomers: what he suffered was 
the meddling of powerful ignoramuses. Galileo was unfree 
to be an astronomer because these ignoramuses insisted on 
weighting the scales with the terror of prisons, torture cham- 
bers, and the stake; he had to take his astronomy from men 
who had never studied it. 

The movement which drives human life forward is exem- 
plified by Galileo's impulse to explore the heavens. The 
forces which hold mankind back, pinned to the ignorance they 
happen to be in, are exemplified by the Inquisitors insisting 
that the preponderant force and not the preponderant evidence 
shall determine whether the sun is the centre of our solar 
system. Thus we may think of the creative, the productive, 
and the adaptive energies of mankind as struggling to release 
themselves from the entanglements and perversions, the ex- 
ploitation and the smothering, the parasitism and the obfuscation 
and the discouragement of aggressive, acquisitive, dogmatic, 
and arbitrary impulses/ Men are moved to plant, but the 
seeds bear fruit with difficulty, so rank are the weeds which 
choke them. The cutting back of the weeds, the clearing of 
little spaces in which good things can grow, has been the task 
of human emancipation. Its method is to restrain arbitrariness. 
But its object is to disengage the human spirit in order that 
it may flourish. 

Thus liberalism, which in its moral essence is a challenge to 
all arbitrariness, to all who would use the rack rather than the 
telescope, is not itself the substantive principle of the good 


life. The substantive principle is in Galileo's curiosity and 
his genius: in fostering and protecting curiosity and genius, 
liberalism is the guardian principle of the good life. It stakes 
its hopes upon the human spirit released from and purged 
of all arbitrariness. It does not ;say what such a spirit can 
or will or ought to make of men's lives. For men have never 
yet known but a little of such freedom. And* they cannot 
hope to imagine what they have never yet known. But they 
have known 4 enough of freedom to know that the arbitrary 
power of men over men is parasitical, that it perverts, that 
it sterilizes and corrupts. 

Though liberalism has often been identified with indifference, 
inaction, and nonresistance, it should now be evident that this 
is mere confusion. A doctrine which is opposed to all ar- 
bitrariness must mean: the determination to resist arbitrariness, 
to check it, to cut it down, to crush it, wherever and whenever 
it appears. It cannot mean, for example, that in the seven- 
teenth century the King was under God and the law, but that 
in the nineteenth century the owners of property were not, 
that in the twentieth century majorities, pluralities, mobs, or 
dictators are not, under God and the law. For liberalism all 
arbitrary power is evil. It matters not what are the titles or 
the pretensions or the promises of arbitrary power. It must 
be resisted and brought under control. 

So liberalism is not quietism and weak government. That 
is the corruption of liberalism. In its vigorous periods liberal- 
ism has always meant rebellion against oppression and a de- 
termination to police aggression and acquisitiveness. Lib- 
eralism, therefore, is not the doctrine of laissez-faire, let 
her rip, and the devil take the hindmost. It does not en- 
visage the demobilization of the police, the repeal of the 
laws, the disestablishment of legislatures and courts. On the 
contrary, the effective liberals have always been concerned 



with the development of the law, with the definition of rights 
and duties, with the organizing of constitutions, with the 
absorption of all power to coerce in the hands of duly consti- 
tuted authorities, with the liquidation or regulation of all kinds 
of private and petty powers within the community. For the 
liberal, as distinguished from the anarchist, holds that mere 
unrestraint does not give the freedom of a voluntary society, 
that unrestraint merely inaugurates ar competitive struggle in 
which the ruthless will exploit the rest. He insists that the 
promise of a voluntary life can be realized only as the law is 
strong enough to restrain aggressors at home and abrpad. 

But in the liberal view the reward for restraining the ag- 
gressor is that the creative and productive faculties can then 
begin to work. Suppose that Galileo had been able to study 
the heavens without having at any time to consider whether 
he would be punished for his conclusions. Suppose that he 
had needed only to argue with the theologians and to debate 
with other astronomers. Suppose that his opponents and his 
critics had been unable to invoke the threats of prison and the 
rack, or even of ostracism and the muttering of the mob. Sup- 
pose that his relations with his contemporaries had been purged 
of all the irrelevance of arbitrary power, that he had felt that 
if he was wrong his only punishment would be the knowledge 
that he had been wrong. Suppose that those who opposed 
him could have thrown into the scales only the immaterial 
weight of tradition, experience, observation, and dialectic. Is 
there any question that in such a community Galileo's faculties 
would have been enhanced, that others would have been en- 
couraged to use theirs, that immense energy devoted to the 
coercive enforcement of a particular dogma would have been 
available in the search for the truest cosmology? 

The essence of the matter is that arbitrariness is a disturbing 
intrusion in the creative life of mankind. It may be a mere 


annoyance, like the buzzing of a fly around the nose of a 
philosopher; or it may be like a great catastrophe, say an earth- 
quake, which stops his work by bringing down the house around 
his ears. We can appreciate the real energy of freedom if we 
think of men, working, studying, collaborating, but beset by 
conquerors, exploiters, adventurers by men who do not work, 
but appropriate the work of others j who do not produce, fyut 
take tolls; who do not invent, but impose prejudices; who 
do not create, but coerce those who do. The pursuit of liberty 
is the affirmation of those who produce the really good things 
of life. 

When a Galileo is coerced by a more powerful but a more 
ignorant inquisitor, his scientific genius is arbitrarily leveled 
down to the obscurantism of his masters. It is only by freeing 
him from the bondage of authority that his superiority as an 
observer and thinker can be exercised. In our time there are 
governments which enforce an official culture by exile, pro- 
scription, the axe, firing squads, castor oil, and imprisonment 
in concentration camps: they are using arbitrary force to re- 
duce scholars and artists, and in fact the whole population, to 
the cultural level of the dominant politicians. The opinion 
of unqualified men is artificially, by the mere arbitrary inter- 
vention of the police, made to prevail over the opinion of 
men who are specially gifted and have labored to qualify 

The same kind of obscurantism results from the exercise 
of all privileges. The man who has built himself a castle 
above the highway in order that he may exact a toll from 
the merchants on their way to market acquires wealth not by 
producing it but by seizing it. His predatory incursions arbi- 
trarily yield the returns which would otherwise go to inven- 
tion, industry, and thrift. But for his castle and his armed 
hands he would be poorer than the passing merchant whom 


he despoils: because he is more powerful but is unrestrained, 
he reaps a greater reward from highway robbery than other 
men can make by producing wealth. Thus the ideal of equal 
rights for all and special privileges for none is inseparable 
from the pursuit of liberty. A free society is one in which 
inequalities in the condition of men, in their rewards, and in 
their social status do not arise out of extrinsic and artificial 
causes out of the physical power to coerce, out of legal 
privilege, out of special prerogative, or out of fraud, sharp 
practice, necessitous bargaining* 

This is no forcible leveling of men to a uniform condition 
of life. That is the tyrant's way. The libertarian does not 
.demand that all the runners in the race must keep in step 
and finish together} he asks that they start from scratch and 
that none shall be permitted to elbow his rival off the track. 
Then the winner will be the best runner. The winner will 
not be the competitor who wangled a handicap from the 
judges, or obtained an advantage which had nothing to do 
with his ability to run the race. Manifestly, the liberal 
conception of equality does not promise to make all men 
equal in riches, influence, honor, and wisdom. On the con- 
trary, its promise is that as the extrinsic inequalities imposed 
by prerogative and privilege are reduced, the intrinsic superiori- 
ties will assert themselves. 

This, I believe, is the insight at the heart of the liberal 
conception of society. I am only too well aware of how im- 
perfectly I have understood it, how imprecisely I have been 
able to put it into words. But I think it is not misleading 
to say that some such dim but pregnant apprehension as this 
has been hammered out on the anvil of long experience, that 
it is no abstract and a priori speculation arrived at in the eight- 
eenth century and declared to mankind by William Ewart 
Gladstone, but that it is much older, has its roots in centuries 


of confused struggle with all manner of censorship and inquisi- 
tion, prerogative and privilege. 

In those struggles men gradually perceived that they must 
disengage creative and productive labor and the friendly 
adaptability of men to one another from the exactions and 
interferences of the predatory, acquisitive, parasitic, prejudicial, 
domineering, and irrational elements of human life. This 
is the "obvious and simple system of natural liberty" * which 
the classic liberals discerned. Though their history was wrong 
when they adopted the naive belief that this natural order 
prevailed in the childhood of the race, though they greatly un- 
derestimated the length and the complexity of the struggle, their 
insight was true and their hearts were in the right place. 

We must not deny the prophet because he speaks in parables 
and ephemeral myths: the classic liberals arrived at a pro- 
found and enduring insight into the difference between the 
real and the factitious in human affairs. They were on the 
side of Galileo because by protecting Galileo the knowledge of 
astronomy is advanced. They knew that to find truth is to 
add to the real values of human existence. They were against 
the Inquisitors because they knew that astronomy cannot be 
advanced by imprisoning astronomers, or by compelling them 
to obtain a license from the secret police and the minister of 

The ultimate concern of the liberal is with the enhancement 
of real values by men who actually observe, reason, meditate, 
invent, dig, construct seeking to arrange the world to satisfy 
human demands. To this end the laws, constitutions, bills of 
rights, courts, and social philosophies are but the means which 
allow creative labor to proceed without arbitrary interference. 

Thus the challenge to oppression arises from the produc- 
tive energies of men. The movement toward human emancipa- 

1 Adam Smith, of. <#., Bk. IV, Ch. 9. 


tion is the rebellion of those who plant and till, dig and make, 
invent and construct, explore and understand; they cannot work 
and reap their rewards until they have subdued those who 
exploit and throttle and dominate their productive labors. 
Men withdrawn into an ivory tower can be indifferent to op- 
pression and can come to terms with it; but those who must 
earn their living in the sweat of their brows cannot be indiffer- 
ent, nor those who have the instinct of workmanship, or are 
curious and must understand the world and their destiny 
in it 

Among them the liberators have found their followers 
among rebellious slaves, serfs demanding land and peace, mer- 
chants crying out against the robber barons, small men resisting 
the monopolists, industrial workers demanding recognition and 
status and equality of bargaining power, among artists and 
men of science and educators and parents crying out against 
the conscription of all they have created. 

Their impulse to create has been their impulse to be free. 
And as they create it becomes more and more necessary that 
they should be free. For as men work, and perfect their 
work by invention and skill, they lift themselves out of the 
primitive condition in which they lead a meagre and self- 
sufficing existence. The improvement of their skill, the de- 
velopment of their special aptitudes, the use of their particular 
opportunities, result in the specialization of their labor. Be- 
cause they do the work they are able to do, they are no longer 
self-sufficing and must live by the exchange of their products. 
They enter into the economy of the division of labor. 

The division of labor was not invented by economists} it was 
not invented by the inventors of machinery and steam railroads. 
The division of labor in an exchange economy is implied in 
the very essence of productive labor itself. In order that 
Galileo might study the heavens it was not sufficient that the 


Inquisitors should let him alone; it was necessary that some- 
one else should grow the food he ate and make the clothes 
he wore and grind the lenses through which he observed the 
heavens. He had to be liberated not only from the oppres- 
sion of arbitrary authority but from the sterile drudgery of a 
self-sufficient existence. And because by the division of labor 
he was liberated from the drudgery, he was able to be an astron- 
omer who necessarily rebelled against authority. 

Thus the connection between liberty and the industrial 
revolution is organic. The impulse to create and the impulse 
to be free are cumulative: each is to the other both cause and 
effect. Because men wish to work they insist on freedom 
from arbitrary interference; because they are free, they work by 
a division of labor which requires the freedom of certain and 
equal rights. 

This is the reason why all the conceptions which constitute 
the testament of liberty have been evolved in great societies 
that have lived by extensive and complicated commerce. They 
come to us from the Greco-Roman society, from the merchant 
cities* of the Renaissance, from western Europe, from Eng- 
land, France, the Netherlands, and Italy, from the peoples 
who first emerged from self-sufficiency and had to establish 
a common law in which their transactions could be secure. It 
is no accident that it was the Athenians, living by commerce, 
rather than the Spartans living by exploitation and war, who 
conceived the good life; or that the Romans who traded all 
over the known world should have understood the necessity 
for law; or that the nation of shopkeepers was the mother of 
parliaments; or that Yankee traders in Boston fomented the 
American Revolution and the abolition of slavery. For among 
a people living by a primitive undifferentiated economy under 
routine and in isolation, the necessity for constitutional liberty 
does not exist and can scarcely be conceived. 


3. On Designing a New Society 

This truth our contemporary authoritarians, whether of the 
left or of the right, have failed to grasp. They look upon 
the great sprawling complex of transactions by which mankind 
lives; seeing that these transactions are in large part still un- 
regulated by law, and that therefore there is much confusion and 
injustice, they have turned their backs upon the task of regula- 
tion by law and have beguiled themselves with the notion that 
they can plan this economy systematically and administer it 
rationally. The exact contrary is the truth. The modern 
economy is perhaps the least systematic of any that has ever 
existed. It is world-wide, formless, vast, complicated, and, 
owing to technological progress, in constant change. For that 
reason it is incapable of being conceived as a system, or of being 
replaced by another system, or of being managed as an ad- 
ministrative unit. 

The hankering for schemes and systems and comprehensive 
organization is the wistfulness of an immature philosophy which 
has not come to terms with reality, no less when the conservators 
of vested interests would stabilize the modern economy in 
statu quo by protective laws and monopolistic 'schemes than 
when the revolutionist makes blueprints of a world composed 
of planned national economies "coordinated" by a world- 
planning authority. Neither takes any more account of reality 
than if he were studying landscape architecture with a view 
to making a formal garden out of the Brazilian jungle. 

For the greater the society, the higher and more variable the 
standards of life, the more diversified the energies of its people 
for invention, enterprise, and adaptation, the more certain it 
is that the social order cannot be planned ex cathedra or gov- 
erned by administrative command. We live in such an im- 
mensely diversified civilization that the only intelligible criterion 


which political thinkers can entertain in regard to it, the only 
feasible goal which statesmen can set themselves in governing 
it, is to reconcile the conflicts which spring from this diversity. 
They cannot hope to comprehend it as a system. For it is not 
a system. They cannot hope to plan and direct it. For it is 
not an organization. They can hope only to dispense lawful 
justice among individuals and associations where their interests 
conflict, to mitigate the violence of conflict and competition by 
seeking to make lawful justice more and more equitable. 

It requires much virtue to do that well. There must be 
a strong desire to be just. There must be a growing capacity 
to be just. There must be discernment and sympathy in 
estimating the particular claims of divergent interests. There 
must be moral standards which discourage the quest of priv- 
ilege and the exercise of arbitrary power. There must be 
resolution and valor to resist oppression and tyranny. There 
must be patience and tolerance and kindness in hearing claims, 
in argument, in negotiation, and in reconciliation. 

But these are human virtues; though they are high, they are 
within the attainable limits of human nature as we know it. 
They actually exist. Men do have these virtues, all but the 
most hopelessly degenerate, in some degree. We know that 
they can be increased. When we talk about them we are 
talking about virtues that have affected the course of actual 
history, about virtues that some men have practised more than 
other men, and no man sufficiently, but enough men in great 
enough degree to have given mankind here and there and for 
varying periods of time the intimations of a Good Society. 

But the virtues that are required for the overhead adminis- 
tration of a civilization are superhuman; they are attributes of 
Providence and not of mortal men. It is true that there have 
been benevolent despots and that for a little while in a par- 
ticular place they have made possible a better life than their 


subjects were able to achieve without the rule of a firm and 
authoritative guardian. And no doubt it is still true that a 
community which does not have the essential discipline of lib- 
erty can choose only among alternative disciplines by author- 
ity. But if a community must have such a guardian, then it 
must resign itself to living a simple regimented existence, must 
entertain no hopes of the high and diversified standard of life 
which the division of labor and modern technology make pos- 
sible. For despots cannot be found who could plan, organ- 
ize, and direct a complex economy. 

To do that would require a comprehensive understanding of 
the life and the labor and the purposes of hundreds of mil- 
lions of persons, the gift of prophesying their behavior and 
omnipotence to control it. These faculties no man. has ever 
possessed. When in theorizing we unwittingly postulate such 
faculties, we are resting our hopes on a conception of human 
nature which has no warrant whatever in any actual experience. 
The collectivist planners are not talking about the human race 
but about some other breed conceived in their dreams. They 
postulate qualities of intelligence and of virtue so unlike those 
which men possess that it would be just as intelligible to make 
plans for a society in which human beings were born equipped 
to fly like the angels, to feed on the fragrance of the summer 
breezes, and endowed with all possible knowledge. 

Thus while the liberal philosophy is concerned with the re- 
form of the laws in order to adapt them to the changing needs 
and standards of the dynamic economy, while the agenda of 
reform are long and varied, no one must look to liberalism for 
a harmonious scheme of social reconstruction. The Good So- 
ciety has no architectural design. There are no blueprints. 
There is no mold in which human life is to be shaped. In- 
deed, to expect the blueprint of such a mold is a mode of think- 
ing against which the liberal temper is a constant protest. 


To design a personal plan for a new society is a pleasant 
form of madness; it is in imagination to play at being God and 
Caesar to the human race. Any such plan must implicitly as- 
sume that the visionary or someone else might find the power, 
or might persuade the masses to give him the power, to shape 
society to the plan; all such general plans of social reconstruction 
are merely the rationalization of the will to power. For that 
reason they are the subjective beginnings of fanaticism and 
tyranny. In these Utopias the best is the enemy of the good, 
the heart's desire betrays the interests of man. To think in 
terms of a new scheme for a whole society is to use the idiom 
of authority, to approach affairs from the underlying premise 
that they can be shaped and directed by an overhead control, 
that social relations can be fabricated according to a master 
plan drawn up by a supreme architect. 

The supreme architect, who begins as a visionary, becomes a 
fanatic, and ends as a despot. For no one can be the supreme 
architect of society without employing a supreme despot to 
execute the design. So if men are to seek freedom from the 
arbitrary dominion of men over men, they must not entertain f 
fantasies of the future in which they play at being the dictators 
of civilization. It is the bad habit of an undisciplined imag- 
ination. The descent from fantasy to fanaticism is easy. Real 
dictators raised to power by the fanatics who adore them are 
only too likely to adopt the fantasy to justify their lust for 

On the other hand, reasonable and civilized people who 
would like to make the best of the situation before them, but 
have no ambition for, or expectation of, the power to reshape 
a whole society, get no help from these architectural designs. 
The blueprint, be it as grandiose a work of genius as Plato's 
Republic, cannot hope to fit the specific situation. No a priori 
reasoning can anticipate the precise formulae which will recon- 


cile the infinitely varied interests of men. The reconciliation 
has to be achieved by the treatment of specific issues and the 
Solution will appear only after the claims and the evidence 
have been examined and fairly judged. Thus in Plato's great 
scheme each man was assigned his station and his duties; any 
architectural plan is necessarily based on the same presump- 
tion. But Plato's scheme worked only in Plato's imagina- 
tion, never in the real world. No such scheme can ever work 
in the real world. For the scheme implies that men will re- 
main content in the station which the visionary has assigned 
to them. To formulate such plans is not to design a society for 
real men. It is to re-create men to fit the design. For in real 
life men rest content in their station only if their interests 
have been successfully reconciled: failing that, they do not 
fit the design until they have been dosed with castor oil, put 
in concentration camps, or exiled to Siberia. 

That is why the testament of liberty does not contain the 
project of a new social order. It adumbrates a way of life 
in which men seek to reconcile their interests by perfecting the 
rules of justice. No scheme which promises to obliterate the 
differences of interest can be deduced from it, no architectural 
design of society in which all human problems have been re- 
solved. There is no plan of the future: there is, on the con- 
trary, the conviction that the future must have the shape that 
human energies, purged in so far as possible of arbitrariness, 
will give it. Compared with the elegant and harmonious 
schemes which are propounded by the theoretical advocates of 
capitalism, communism, fascism, it must seem intellectually 
unsatisfying, and I can well imagine that many will feel about 
the liberal society as Emma Darwin felt when she wrote about 
the Descent of Man, "I think it will be very interesting, but 
that I shall dislike it very much as again putting God further 
off." 1 

* Cited in Donald Culross Peattie's Green Laurels, p. 323. 


But though it must seem an insufficient ideal both to those 
who wish to exercise authority and to those who feel the need 
of leaning upon authority, it is the only practicable ideal of 
government in the Great Society. When huge masses of men 
have become dependent upon one another through the division 
of labor in countless, infinitely complex transactions, their ac- 
tivities cannot be planned and directed by public officials. 

Thus it is true that the liberal state is not to be conceived 
as an earthly providence administering civilization. That 
is the essence of the matter. To the liberal mind the notion 
that men can authoritatively plan and impose a good life upon 
a great society is ignorant, impertinent, and pretentious. It 
can be entertained only by men who do not realize the infinite 
variety of human purposes, who do not appreciate the poten- 
tialities of human effort, or by men who do not choose to respect 

The liberal state is to be conceived as the protector of equal 
rights by dispensing justice among individuals. It seeks to 
protect men against arbitrariness, not arbitrarily to direct them. 
Its ideal is a fraternal association among free and equal men. 
To the initiative of individuals, secure in their rights and ac- 
countable to others who have equal rights, liberalism entrusts 
the shaping of the human destiny. It offers no encouragement 
to those who dream of what they could make of the world if 
they possessed supreme power. In the testament of liberty 
these ambitions have been assessed: the record of all the 
Csesars from Alexander to Adolf is visible. The world has 
known many societies in which each man had his station, his 
duties, and his ordained destiny, and the record shows that 
it is beyond the understanding of men to know all human 
needs, to appreciate all human possibilities, to imagine all 
human ends, to shape all human relations. 

Yet if the ambitions of liberalism are more modest than 
those of authority, its promise is greater. It relies upon the 


development of the latent faculties of all men, shaped by their 
free transactions with one another. Liberalism commits the 
destiny of civilization, not to a few finite politicians here and 
there, but to the whole genius of mankind. This is a grander 
vision than that of those who would be Caesar and would set 
themselves up as little tin gods over men. It is a hope en- 
gendered in the human heart during the long ages in which 
the slowly emerging impulses of civilization, beset by bar- 
barism, have struggled to be free. 



/. The Lost Generation 

IN the occasional intervals when the world is quiet, men quickly 
take for granted those first and last things which in the ages 
of disorder are matters of life and death. The second half 
of the nineteenth century was such an interlude and in the cul- 
ture of the western nations elemental security was thought to 
be so firmly established that its principles were almost com- 
pletely forgotten. Lord Acton, for example, with all his 
extensive learning and profound knowledge of European his- 
tory, wrote as one who had reached a safe plateau from which 
civilized men could look down upon the dark jungle below 
them where their forefathers had made their heroic struggles. 
"An army of fifty thousand English soldiers," he said in 1 877, 1 
"has never been seen in battle," and he had to remind his audi- 
ence of many curious but archaic aspects of human behavior, 
as, for example, that as late as the eighteenth century, "Venetian 
senators of honourable and even religious lives employed as- 
sassins for the public good with no more compunction than 
Philip II or Charles IX." 

To most of those who heard him, the Venetian Senators must 
have seemed as remote as the priests of Moloch; indeed Lord 
Acton seemed to be speaking as an antiquarian when he re- 
called the fact that the Chancellor of Louis XIII, the cele- 
brated Cardinal Richelieu, "held that it would be impossible 

1 Address on "Freedom in Christianity," in History of freedom and 
Other Essays. 


to keep the people down if they were suffered to be well off," 
and that "France could not be governed without the right of 
arbitrary arrest and exile; and that in case of danger to the 
State it may be well that a hundred innocent men should 
perish." They must have been mildly astonished when he 
dug up the .quaint speculations of great men, of Descartes, for 
example, who advised kings to crush all who might resist their 
power; of Hobbes, who taught that authority is always in the 
right; of Pascal, who thought it absurd to reform laws, or to 
set up an ideal justice against actual force; of Spjnoza, who 
assigned to the state the absolute control of religion. 

To the reader of the current newspapers such deeds and such 
views are no longer the curiosities of polite learning. For him 
they are virulently alive once more and his world is tufrbulent 
with the violence of men who really do such deeds and really 
hold such views. He is perforce reminded that the struggle 
of his forefathers continues, that even the rudiments of the 
good life have still to be wrested daily from the earth in sweat 
and trouble and defended against implacable enemies. If 
he is of middle age and, therefore, a survivor from the age of 
temporary peace and plenty, he is compelled to realize that 
he was misled by the sheltered thinkers of that age by men 
who did not apprehend deeply, because they did not have to 
apprehend vividly, the imperatives of human existence. 

The certainties they taught him to take for granted are in 
ruins. The organized routine upon which he so much de- 
pended that he regarded it as the natural order of things is 
disrupted, and his constant attempts to put it together again baffle 
his intelligence and break his heart. For there is no longer 
a general understanding among civilized men: they cannot fall 
back upon a common allegiance to assuage their partisanship; 
they have no consensus of accepted ideas. Yet these things 
they must have if they are to restore the civilized order. There 


are no end of fashionable opinions. But as against the con- 
victions of those who are ready to kill or be killed to achieve 
their ends, the civilized arguments are subtle, complicated, 
and effete. In the epochal crisis of our time the cause of 
civilization is being defended by men who possess a great 
tradition that has become softened by easy living, by men wjio 
have forgotten the necessities in which their principles were 

It would be mere self-deception to tell ourselves that the dis- 
orders into which we have fallen can be overcome by an ingenious 
programme of laws, policies, measures, and political combina- 
tions. However wisely the programme may be conceived, it 
will not be adopted and supported until it receives an impulse 
from the deepest energies of the human spirit. But to-day, as 
in other great periods of disorder, the strongest convictions are 
held by men who, whether they mean to or not, aggravate the 
disorder. The cause of civilization does not now rest upon 
equally strong convictions but rather upon helpless forebodings 
of disaster, and an impotent longing for peace and dignity. 
For the masses of men consent reluctantly to the great reaction 
towards arbitrariness, but nonetheless they consent, having no 
positive faith which springs from the roots of their being with 
which they can whole-heartedly challenge it. Though they 
feel that they are sinking into barbarism, their judgment is 
confounded, their minds disoriented in the tangle of abstractions, 
technicalities, claims and counter-claims through which they 
are supposed to find their way. 

It is a dark forest. In place of the polestar which could 
guide them there are many perplexing lights. To explore 
minutely, however conscientiously and scientifically, the thicket 
in which some of the travelers are lost will not show them the 
highroad once more. They must find again the polestar which 
men have followed in their ascent from barbarism towards 



the Good Society. Where shall they find it but in a profound 
and universal intuition of the human destiny which, to all 
who have it, is invincible because it is self-evident? 

2. The Ultimate Issue 

That much I had dimly apprehended when I began this 
inquiry. I knew that the great men who achieved our free- 
dom had drawn their courage from truths that they held to be 
self-evident, but I had grown up in an age when it was said 
that there were no self-evident truths. Yet I could not rid 
myself of the notion that the Englishmen and Americans who 
had successfully overthrown tyranny and founded flourishing 
free societies had a more genuine experience and a deeper in- 
sight than men of a sheltered age. It was true that they had 
lived before the age of manufacture with power-driven ma- 
chinery, that they traveled by horse and buggy rather than by 
airplane; but they had dealt at first hand with tyrants and 
revolutions and social disorder. They had known how to orient 
their spirits, gather together their faculties, and challenge the 
turbulence and tyranny of their times. Might it not be that they 
had possessed an insight which we have lost, and that, if we are 
to be worthy of our inheritance from them, we must recollect 
and repossess and reanimate their ancient and half-forgotten 
faith? This led me to question the idea I had been taught to 
take for granted, that modern men must base their political con- 
victions on altogether different premises from those which civ- 
ilized men of the past had held to be self-evident. So I began 
to ask myself whether perhaps in reasoning about the problems 
of our time we had lost vital contact with self-evident truths 
which have the capacity to infuse the longing to be civilized 
with universal and inexhaustible energy. 

As I began to study the contending social philosophies of this 


age, it became apparent, first vaguely and then clearly, that 
they were variants on the same theme. I saw that the grandiose , 
promises of the modern partisans depend for their fulfillment on 
some sort of coercive direction of men's lives and labor. Yet at 
first in examining the theories and the deeds of the authoritarian 
collectivists I could not see beyond a profound but undefined 
distaste for the manner in which they oppressed the human be- 
ings who fell within their power. I could find no more solid 
ground on which to stand than the feeling that there was an 
intolerable presumption in the way they disposed of men. But 
that prejudice was not enough, even when it could be demon- 
strated that the authoritarian philosophies, with all their prom- 
ises of peace, plenty, and unity, were in fact inexorably di- 
viding, impoverishing, and embroiling mankind. It was not 
enough because a vague sense of their indignity, and an em- 
pirical argument about their consequences, do not in themselves 
make clear the other path: wanderers lost in the forest do not 
find their way merely by realizing how miserable they are and 
in what great danger. 

Then I began to work on the second part of this book, 
fumbling around in my own prejudices .and unexamined no- 
tions, studying intently certain of the classic instances of human 
emancipation, and trying to discern the cardinal ideas which had 
inspired them. I had learned that in the authoritarian regimes 
the personal dictator or the oligarchy is invested with the right 
to dispose of human beings according to the sovereign's own ulti- 
mately unaccountable opinion of what is fitting. Then I began 
to perceive that the overhead planning and coercive direction of 
human activity was radically incompatible with the economy 
of the division of labor. I saw then that historic liberalism was 
the necessary philosophy of the industrial revolution. ' Then I 
could see why it was that the progress of liberty has accompanied 
the division of labor, and finally I realized that the specific 


achievements of liberals were founded upon the supremacy of 
* a common law replacing the dominion of men over men. I be- 
gan to realize that this has been the guiding principle of the 
struggle against the arbitrariness of men and their masters j that 
the history of constitutionalism is the effort to transform the 
coercive authority of the state so that it shall be employed to 
protect and disarm, not to magnify by privileges or repress by 
discrimination, productive energy and voluntary associations of 
individuals. After that it was clear that the division of labor, 
democracy, and the method of the common law are organically 
related and must stand or fall together, because they are dif- 
ferent aspects of the same way of life. 

But still the question remained as to where, at what final 
rampart, a man must stand when he fights for human freedom. 
I could see that in the polity of a free society the regulation of 
human affairs was achieved by the definition and adjudication 
of personal rights and duties, whereas in all unfree societies it 
was done by administration from above. But for a long time, 
until I began to recall the actual process by which human beings 
had been emancipated, the ultimate difference between these 
two ways of governing human societies was not sufficiently clear. 
Then it began to dawn upon me that as the general dominion of 
men over men had been reduced to definite laws fixing their 
reciprocal rights and duties, a new valuation of man had 
emerged. In the dominion of men over men, be it the master 
over his slave, the despot over his subjects, the patriarch over 
his wives and children, the nexus is personal and those who are 
underneath are in effect the property of those above them. 
But as their relationships are progressively defined by law and 
custom in terms of specific rights and duties this personal and 
possessive nexus dissolves. By the reduction of general su- 
premacy to particular obligations, something is left over a 
residual essence in each man which is not at anyone's disposal. 


That essence becomes autonomous. And to out of the slave, 
who was a living person treated as a thing, there emerges a 
person who is no longer a thing. 

It is just here, I submit, that the ultimate issue is joined, on 
the question whether men shall be treated as inviolable persons 
or as things to be disposed of; it is here that the struggle be- 
tween barbarism and civilization, between despotism and liberty, 
has always been fought. Here it must still be fought. The 
' self-evident truth which makes men invincible is that inalienably 
they are inviolable persons. 

In so far as we can see the issue clearly, the ground on which 
we stand is firm beneath our feet, the cause in which we are en-* 
listed is clear. If we are asked why the righteous Venetian 
Senators of the eighteenth century were wrong when they em- 
ployed assassins for the public good, we can then reply that they 
were wrong because they violated the essential manhood of 
other men. They treated their opponents as things to be dis- 
posed of as they would dispose of rubbish. Then we can say 
that France was governed badly when Richelieu said it could 
not be governed without the right of arbitrary arrest and exile j 
we can declare that a society is barbarous or diseased where men 
are dealt with as inanimate objects; we can reply to Descartes, 
who invited kings to crush all who might resist, by affirming that 
the dissenters are no less men than the kings themselves. 

This is the touchstone of civilized judgment. And wherever 
we examine the pretensions of tyrants and the grounds on which 
men have challenged them, we find, I believe, that the ultimate 
complaint is that tyrants and exploiters treat others as they 
would treat brute things. To treat another person as a brute 
thing is to deal with him arbitrarily. This is the inwardness of 
the capricious and lawless life. For where men are degraded 
to the status of chattels, pawns in a game, cannon fodder, robots, 
they are used as means to the ends of others and the injunction 


has been suspended: "Therefore aU things whatsoever ye would 
that men should do tq you, do ye even so to them.' 1 

3. Man the Inviolable 

The recognition that all men are persons, and are not to be 
treated as things, has arisen slowly in the consciousness of man- 
kind. It has made its way with difficulty against the recurrent 
testimony of immediate experience, against sophisticated argu- 
ment, against the predatory and acquisitive instincts which men 
bring with them out of the animal struggle for existence. The 
passage from barbarism into civilization is long, halting, and 
unsure. It is a hard climb from the practice of devouring one's 
enemies to the injunction to love them. But in that long ascent 
there is a great divide which is reached when men discover, de- 
clare, and acknowledge, however much they may deny it in 
practice, that there is a Golden Rule which is the ultimate and 
universal criterion of human conduct. For then, and then only, 
is there a standard to which all can repair who seek to transform 
the incessant and indecisive struggle for domination and sur- 
vival into the security of the Good Society. 

The Golden Rule, sometimes in its positive form but more 
often in the negative form, has been enunciated among many 
peoples widely separated in time and space. 2 In the Upani- 
shads of Indian Brahmanism it is said: "Let no man do to 
another that which would be repugnant to himself. ... In 
refusing, in bestowing, in regard to pleasure and to pain, to what 
is agreeable and disagreeable, a man obtains the proper rule by 
regarding the case as like his own." 8 "My doctrine," says 
Gautama Buddha, "makes no distinction between high and low, 
rich and poor. It is like the sky. It has room for all, and like 

f Cf. Joyce O. Hertzler's The S octal Thought of the Ancient Civilizations. 
* Mthabhtrata, XIII, 5571ff., #&., p. 345. 


waves it washes all alike. . . . To him in whom love dwells, 
the whole world is but one family," 4 The rule appears again 
and again in Confucius: "When one cultivates to the utmost 
the capabilities of his nature and exercises them on the principle 
of reciprocity, he is not far from the path. What you do not 
want done to yourself, do not do unto others." * 

If we ask ourselves why we should not do unto others what 
we do not want done to ourselves, the only possible reason must 
be that we have recognized them as inviolable persons, finally 
and essentially distinguished from things. Thus the Golden 
Rule is the moral maxim which establishes itself when men 
recognize others as autonomous persons, when they acknowledge 
the inalienable manhood of other men. The rule is meaning- 
less where that recognition is absent. It can be preached from 
all the pulpits of the world and it will be without effect unless 
men acknowledge that there is an inalienable essence in all other 
men. But for this acknowledgment of the ultimate distinction 
between a person and a thing we should think no more of step- 
ping on a man than of stepping on the carpet. Without it 
there is nothing in the human organism to which human rights 
can be ascribed or attached. 

But wherever the sentiment of the indefeasible qualities of 
persons appears, there begins to spread through all institutions 
that exploit and oppress "the infection of an uneasy spirit."* 
For six hundred years, says Whitehead, the ideal of the intel- 
lectual and moral grandeur of the human soul had haunted the 
ancient Mediterranean world. It troubled the conscience of 
Aristotle, and in order to vindicate human slavery he had to 
argue that slaves are by nature servile. The Stoic philosophers 
and lawyers, who initiated the abolition of slavery, taught that 

4 Dhammapada, V, ttid. % p. 194. 

5 The Doctrine of the Mean, XIII, 3, iM n p. 227. 
tt Whitehead, Adventures of Ideas, p. 21. 


mil men are "equal persons in the great court of nature," T not 
in the sense that their faculties were identical or equivalent, but 
that in each man there was finally an inviolable and inalienable 
essence* The Stoics spoke quietly and in terms intelligible only 
to an elite* To the masses of the western world the news that 
all men are more than things was proclaimed by the Christian 
gospel and was celebrated in its central mysteries. It pro- 
claimed the news to all men that they were not brute things, to 
all men without exception, the weak, the outcast, the down- 
trodden, the enslaved, and the utterly dejected. The influence 
of that gospel has been inexhaustible. It anchored the rights 
of men in the structure of the universe. It set these rights 
apart where they were beyond human interference. Thus the 
pretensions of despots became heretical. .And since that revela- 
tion, though many despots have had the blessings of the clergy, 
no tyranny has possessed a clear title before the tribunal of the 
human conscience, no slave has had to feel that the hope of 
freedom was forever foreclosed. For in the recognition that 
there is in each man a final essence that is to say, an immortal 
soul which only God can judge, a limit was set upon the do- 
minion of men over men. The prerogatives of supremacy were 
radically undermined. The inviolability of the human person 
was declared 

Towards this conviction men have fought their way in the 
long ascent out of the morass of barbarism. Upon this rock 
they have built the rude foundations of the Good Society. 

4. The Degradation of Man 

The great reaction in the latter part of the nineteenth century 
was ushered in by men who had little use for the traditional 

T Omnes homines nature aequdes sunt. The quotation in the text is the 
paraphrase of Ernest Barker in his introduction to the English translation of 
Gierke'i Natural Law and the Theory of Society, p. xxxvii. 


ideas in which the inviolable essence of the human personality 
was affirmed. Their intentions were, of course, excellent, and 
they imagined that they were attacking only superstition, bigotry, 
and obscurantism. But in their battle with the theologians 
and the clerics their zeal outran their insight. They brought 
down the humanist ideal in the crash of the supernatural order $ 
and from it man, who had fancied himself a little less than the 
angels, emerged as much less*than a man. The iconoclasts were 
too smart to be wise, too rational to be reasonable, too much 
enchanted with an immature science to hold fast to tested truths. 
They could not find the human soul when they dissected their 
cadavers 5 they could not measure the inalienable essence. So in 
the high realms of the intelligence there prevailed a radical dis- 
respect for men, and the human ideals of justice, liberty, equal- 
ity, and fraternity were relegated to the limbo of old super- 
stitions along with God, the soul, and the moral law. What 
could a mere physico-chemical system or a bundle of conditioned 
reflexes have to do with such glamorous nonsense? 

In the fury to explain men rationally there was explained 
away their essence, which is their manhood. There remained 
only an organism which was born, was nourished, was stimu- 
lated, reproduced itself, was destined to fight, was compelled 
to rationalize its appetites, and then diedj there was only this 
passive being, determined by inheritance and circumstance, and 
therefore fit only to be manipulated and used. To the heresi- 
archs of the nineteenth century the destiny of this creature was 
manifest j it was manifest in many contradictory ways to be 
sure, but manifest in its own way to the Hegelians, the Marxians, 
the pseudo-Darwinians, and the Spenglerians. Did they not 
have their histories to prove that men were less than men, 
emanations of the Absolute, pawns moved by the dialectic of 
history, animals struggling for survival, cells in a super- 
organism, members of the Leviathan? They could prove that 
justice was the interest of the stronger, liberty the pretext of 


self-interest, equality the envy of the disinherited. Adam 
Smith believed in liberty. British and American manufacturers 
applauded Adam Smith. Thus it was triumphantly demon- 
strated that liberalism was not concerned with the liberties of 
men but with the profits of British entrepreneurs. By this 
process of historical interpretation a host of learned ignoramuses 
argued that no ideal had validity if any class in the community 
prospered by upholding it. Having conceived man as a being 
without autonomy, they could not believe he had authentic 
purposes, inalienable rights, or binding obligations: in so far as 
he seemed to be purposeful, to claim rights, to perform duties, 
they had to explain his behavior as the rationalization of his 
appetites and his circumstances. 

It would require another Erasmus to depict the confusion 
engendered by this disorientation of the human mind. With 
man degraded to a bundle of conditioned reflexes, there was no 
measure of anything in human affairs: all the landmarks of 
judgment were gone and there remained only an aimless and 
turbulent moral relativity. Thus our contemporary culture 
has vacillated between a doctrine of human predestination and 
a doctrine of human providence, holding at one moment that 
man's destiny is inexorably fixed and at another that it can be 
planned and managed. Such is the moral bewilderment that 
the historical determinists, who have nothing but scorn for the 
idea of free will, have become the protagonists of a consciously 
planned society in Russia, and the mystical collectivists who 
announced the manifest destiny of nations and tribes as corporate 
leviathans have become the exponents of arbitrary personal 
leadership in Italy and Germany. Yet they are unabashed by 
their contradictions. For the denial of the human soul was 
the perfect preparation for these revivals of tyranny. By the 
theory of predestination 'the masses were taught to obey and 
to demand that they be taken care of, and in the theory of human 


providence their masters found the justification of arbitrary 

. It became the fashion to say again with Hegel that "world 
history is realized reason. Its plan is knowable. It entrusts 
to particular nations missions which transcend justice and mo- 
rality." 8 Against those missions, "subjective morality must not 
raise its puling litanies" about decency, modesty, humanity, 
charity, tolerance, justice, liberty, equality. All the diverse 
prophets who knew the. knowable plan of realized reason in 
world history developed a magnificent 'contempt for any idea 
which, because it respected the inviolability of the individual, 
might justify resistance to these missions. They were blatantly 
and proudly without morals. For morals call for a reciprocity 
among autonomous beings. So as the forces of the modern 
disorder began to be agitated, the liberal philosophy became the 
object of furious contempt. A chorus was heard, like that in 
Babel, denouncing it. According to Marx, liberalism was the 
morality of capitalists. According to Nietzsche, it was the 
morality of slaves. It was crass materialism. It was also 
stupid idealism. It was the opiate of the people and it was 
ineffectual sentimentality. It was the ideology of the middle 
class: it was a dangerous incitement of the masses. It was 
Christian, it was Jewish, it was Puritan, it was British, it was 
American, it was the French Revolution, it was religious super- 
stition, and it was irreligious. The fascists declared that lib- 
eralism corrupts the national spirit; the communists that it cor- 
rupts class consciousness. Marx and Hegel, Nietzsche and 
Alfred Rosenberg, Lenin, Stalin, Mussolini, and Hitler, reached 

' Philosofhie des Rechts, par. 342-46. Cited in E. F. Carritt's Morals 
and Politics, p. 115. From Hegel is derived the ideology of the Prussian 
military state and of Marxian socialism. Marx (Das Kafital, preface to 2nd 
edition) said that Hegel's idealism was philosophy standing on its head, and 
that he proposed to turn it right way up. The difference, if any, is between 
the totalitarianism of Moscow and of Berlin. 


agreement on a common ground. . They agreed that the con- 
science of free men is incompatible with their purposes. 

But for their realization that the human essence stands in 
their way, the actual collectivists would not go to such lengths 
to eradicate religion among their subjects. They would not, 
amidst all the immediate difficulties which confront them, find 
it necessary to strike at the practice of religion. But they do. 
Collectivist regimes are always profoundly irreligious. For 
religious experience entails the recognition of an inviolable 
essence in men; it cultivates a self-respect and a self-reliance, 
which tend at some point to resist the total subjection of the 
individual to any earthly power. By the religious experience 
the humblest communicant is led into the presence of a power 
so much greater than his master's that the distinctions of this 
world are of little importance. So it is no accident that the only 
open challenge to the totalitarian state has come from men of 
deep religious faith. For in their faith they are vindicated as 
immortal souls, and from this enhancement of their dignity 
they find the reason why they must offer a perpetual challenge 
to the dominion of men over men. 

It must always be the ambition of the despot to destroy re- 
ligion if he cannot exploit it as an instrument of his power. 
In the great disputes between Ghibelline and Guelph, as in the 
religious controversies in Russia and Italy and Germany^ the 
immediate issue has often seemed to be whether the clergy 
should rule the politicians or the politicians should rule the 
clergy. Though the issue is obscured where ministers of re- 
ligion are themselves worldlings greedy for power and wealth, 
the underlying issue has always been whether religious ex- 
perience should be subservient to or should be allowed to correct 
secular purposes. In the powerful national collectivist states 
of our time, the sins of the clergy have been a pretext, seized 
upon by the collectivists in their determination to stamp out the 


ultimate resistance of the human soul. The real reason for the 
irreligion of fascists and communists is that religion cultivates a 
respect for men as men. Against that respect the totalitarian 
state cannot long prevail. That is why, though all the so- 
called class enemies had been cowed or exterminated in Russia, 
though the democrats, socialists, pacifists, had been beaten, ex- 
iled, or put in Italian and German concentration camps, the 
dictators, for what looked like no good reason at all, went on 
to attack the churches and the religious life. They were well- 
advised. They are not stupid men. They have appraised the 
religious life correctly when they have seen in it the source of 
the infection, or, as we should call it, the source of the inspira- 
tion, that makes men secure in their manhood, rejects the pre- 
tensions of their masters, invests the human personality with 
infinite dignity and untold promise. They have seen truly 
that the religious experience must forever raise up new enemies 
of the totalitarian state. For in that experience the convictions 
which the dictators must crush are bred and continually renewed. 

5. The Foundations of Tyranny 

Indeed, it is not until the conception of human inviolability 
begins to trouble their consciences that men are impelled to in- 
vent reasons which justify slavery, aggression, exploitation, and 
oppression. There are no ideologists in the jungle explaining 
to the wounded animals how proper it is that "the whole little 
wood" should be "a world of plunder and of prey." The 
primitive man plundered or was plundered, preyed or was 
preyed upon, and that was that. 

The oppressors of mankind begin to justify their purposes 
only when they encounter the challenge of men who hold it to 
be self-evident that they are men. But once the apologist for 
arbitrary dealing begins to argue, he has placed himself before 


the tribunal where he is bound to be judged by the very standard 
which he must somehow deny. That is why the inviolability of 
men is a self-evident truth. For all arbitrariness in human 
affairs, when it seeks to rationalize its purposes, is appealing 
to a tribunal which must in the end reject the reasoning. It 
must prove that it is reasonable to be arbitrary. That can be 
done only by denying that its victims are human. The apologist 
must brutalize his victims. In one way or another he must 
dehumanize them by attempting to argue that they are not 
really persons, that they are not autonomous souls, but 

The classic paradigm of any and every apology for the do- 
minion of men over men is Aristotle's defense of slavery. A 
slave, he said, is "a Jiving instrument . . . the property of an- 
other." 9 But already questions -had been raised which he could 
not disregard, whether it was "right or just for any one to be 
a slave" and "whether all slavery is contrary to nature." 10 
So Aristotle proceeded to argue that "whoever are as much in- 
ferior to their fellows as the body is to the soul, or the brutes to 
men these, I say, are slaves by nature." They are, he said, 
"fitted to become the chattel of another person" who have "just 
enough reason to perceive that there is such a faculty as reason 
without being indued with the use of it." Moreover "it is the 
intention of nature** and all the apologists who have followed 
him have been no less conversant with the intentions of nature 
and of God "to make the bodies of slaves and freemen dif- 
ferent from each other, that the one should be robust for their 
necessary purposes but the others erect; useless indeed for such 
servile purposes but fit for civil life." 

But having by definition brutalized the slave to justify his 
slavery, Aristotle had then to fit the definition to the fact that 

I, 4. 
, 5. 


"men of the noblest families might happen to be slaves and the 
descendants of slaves, if they chance to be taken prisoners in war 
and sold." u So in order to justify the slavery of nobles cap- 
tured in war, Aristotle was compelled to argue that "victory is 
always owing to some superior advantage: so that it seems that 
violence does not prevail without ability." Thus we see how 
when the greatest mind of the ancient world sought to use his 
logical power to deny the self-evident truth of human inviola- 
bility, he ended in logical gibberish: a slave is a slave because 
he is enslaved j if the slave were powerful enough to be the 
master, he would not be by nature a slave. 

Yet the argument that "some persons are slaves, other are 
freemen by appointment of nature," is the ultimate doctrine 
upon which every apologist of oppression must rely in order 
to make the law of the jungle take on the guise of rationality 
to civilized men. No doubt it seems like a long jump from 
Aristotle's apology for chattel slavery to the collectivists in 
democratic countries who dream of a rationally administered 
economy. But what conception of men as personalities does 
Mr. Stuart Chase, for example, have when he tells us that "a 
working dictatorship over industry is indicated, if the plant is 
to be efficiently operated" . . . that "the industrial discipline 
must be accepted all of it or it must be renounced" because 
"technological imperative is impersonal, amoral, and non-eth- 
ical"? n I know that Mr. Chase is a civilized man. So was 
Aristotle. Are not Mr. Chase's regimented citizens mere 
"living instruments" of his glorified technicians? And as such, 
because they are less than men, are material to be fabricated by 
his engineers, have they not been stripped of their defenses 
against oppression? Have not the technicians who are to be 
their masters been relieved of all restraint ? If the technological 

u Ibid., I, 6. 
"Of.***., pp. 310-11. 


imperatives of his technocrats are so impersonal, so amoral, and 
so non-ethical, then how can they ever be challenged? Against 
these imperatives there are no human rights, not even the right 
of revolution. 

Of the many rationalizations of tyranny the subtlest is that 
which teaches the individual that he is a cog in a corporate 
machine or a cell in a collective organism. Men have learned 
to defend themselves against personal sovereigns, against the 
doctrine that as slaves they belong to their lord, as subjects to 
their king. But in the presence of the anonymous master, the 
super-organism of the collectivists, they do not so easily discern 
its inhuman pretensions and brutalizing dominion. 

For the demand that men be subordinated and submerged 
in the mass is easily mistaken for the ideal of a fellowship of free 
individuals in which the human personality realizes some of its 
noblest possibilities. It is not always easy to distinguish be- 
tween the patriotism of the collectivist who sacrifices the indi- 
vidual and the patriotism of free men who sacrifice themselves 
voluntarily; or to distinguish between social obligation which is 
the respect of persons for the legal and equitable rights of others 
and social discipline which means that men's lives are to be 
planned and administered by their superiors. The counterfeit 
resembles the real thing just enough to be deeply confusing. 
Thus many cannot even distinguish between the plebiscites by 
which dictators ratify their supremacy and the elections by which 
free men choose their public servants, between the acquiescence 
which the dictators obtain when individuals are cowed, cor- 
rupted, and without recourse, and the consent of self-governing 

But the distinctions, though often obscured, are radical. In 
the social discipline of all collectivists the inviolability of men 
is somewhere denied. Men are not fully persons. They are 
things to be used for purposes which others, be they Aristotle 


or Mr. Stuart Chase, deem desirable. They are conscripts 
under commanders; in Mr. Hilaire Belloc's penetrating phrase, 
they are subjects of the Servile State. On the other hand, in 

- the discipline of a free society, it is the inviolability of all indi- 
viduals which determines the social obligations of each indi- 
vidualj of the official no less than the citizen. They are citi- 
zens who are consulted and consent. And their consent has 
meaning because they are protected in the right to withhold 
consent. The lives of such individuals cannot be administered. 
In their transactions justice can be dispensed, and that justice 
has its criterion and its sanction in the fact that they are in- 

" violable individuals dealing with other inviolable individuals. 
So it is here, on the nature of man, between those who would 
respect him as an autonomous person and those who would de- 
grade him to a living instrument, that the issue is joined. From 
these opposing conceptions are bred radically different attitudes 
towards the whole of human experience, in all the realms of 
action and of feeling, from the greatest to the smallest. 

6. "Watchman, What of the Night?" 

Measured by the creeds that have the greatest vogue, the 
reaction against freedom is almost everywhere triumphant. 
Yet though the reaction is popular, and the masses applaud it, 
the reactionaries have befen winning the battles and losing the 
war. The people have been promised abundance, security, 
peace, if they would surrender the heritage of liberty and their 
dignity as men. But the promises are not being kept. In the 
ascendancy of collectivism during the past seventy years man- 
kind has gone deeper and deeper into disorder and disunion and 
the frustration of its hopes. Because it is entirely incompatibly 
with the economy by which men earn their living, collectivism 
does not work. Because it dismisses the lessons of long ex- 



pcrience in regulating the diversity of human interests by law, 
it is incapable of regulating the modern social ecopomy. Be- 
cause it resurrects a primitive form of human polity, it revives 
the ancient parochial animosities of mankind. Because it af- 
' fronts the essential manhood of men, it is everywhere chal- 
lenged and resisted. Though collectivist theory is the fashion- 
able mode in contemporary thought and guides the practice of 
contemporary politicians, its triumph is in fact a disaster in 
human affairs. 

Though it is momentarily triumphant, it is a failure, and 
must fail, because it rests upon a radically false conception of 
the economy, of law, of government, and of human nature/ 
But while it is possible to lead mankind by error into disaster, 
suffering is a hard school in which men do learn to perceive the 
truth. If the collectivist doctrine conformed to the data of 
experience and the needs of men, it would not be necessary to 
administer collectivism by drilling the people, sterilizing them 
against subversive ideas, terrorizing, bribing, enchanting, and 
distracting them. The ants live successfully, it would seem, 
in a collectivist order: there is no evidence that they require 
ministers of propaganda, censors, inquisitors, secret police, spies, 
and informers, to remind them of their collectivist duties. 
But men do not conform to this scheme of things. Though 
they have been known to accept servitude submissively and even 
gratefully, they are in some deep sense different from horses, 
cows, and domesticated fowl. They persist in troubling the 
serenity of their masters, having in them some quality which 
cannot be owned. The lord can count upon his cattle. But 
he is never so sure of his helots. There is never the same cer- 
tainty in his sovereignty. 

For human beings, however low and abject, .are potentially 
persons. They are made in a different image. And though, 
as Jan Smuts has said, "personality is still a growing factor in 


the universe and is merely in its infancy ," M it asserts itself and 
will command respect. Its essence is an energy, however we 
choose to describe it, which causes men to assert their humanity, 
and oh occasion to die rather than to renounce it* This is the 
energy the seers discerned when they discovered the soul of 
man. It is this energy which has moved men to rise above 
themselves, to feel a divine discontent with their condition, to 
invent, to labor, to reason with one another, to imagine the good 
life and to desire it. This energy must be mighty. For it has 
overcome the inertia of the primordial savage. 

Against this mighty energy the heresies of an epoch will not 
prevail. For the will to be free is perpetually renewed in every 
individual who uses his faculties and affirms his manhood. 

u Holism and Evolution, p. 297. 


AAA, 118*., 121*.; its cotton deal- 
ings, 115 

ABC of the NRA, 10*. 

Abinger,. Lord, 188, 189 

Absolutism, not transitory, SI, S3; 
necessary to totalitarian state, 

Abundant life, specific content of, 
103, 104 

Acton, Lord, quoted, 369 

Adventures of Ideas (Whitehead), 
quoted, 30, 333, 377 

America. See United States 

American Revolution, at culmination 
of mercantilist regime, 135s pro- 
claims Rights of Man, 233 

American Telephone Company, 309 

Ancien Regime, polity of, 11; 
doomed, 48 

Anderson, Dr. Benjamin M., 1140. 

Angell, Sir Norman, 161*. 

Aristotle, 26; his views of slavery, 
377, 384-386 

Armstrong, Hamilton Fish, 319*. 

Ashton, . B., 57*. 

Associations, natural, 308312 

Authoritarian principle, modern belief 
in, 46; in politics, 79; in- 
evitable method of, 10; and regula- 
tion of an economy, 11, 12; col- 
lectivists turn to, 17} nemesis of, 
37-40; and protective tariff, 138; 
promotes monopolies, 141; argu- 
ments favoring, 283? versus liberal- 
ism, 289-294 


Bacon, Roger, 343 

Bankhead Cotton Control, 123 

Bargaining, evil of necessitous, 222, 

Barker, Ernest, 269*., 378*.; quoted, 


Barone, Enrico, 94*. 
Beard, Charles A., 315*.; quoted, 

109, 110, 139 
Belgium, could not give birth to 

communism, 84; formation of its 

state, 132, 133 
Belloc, Hilaire, 387 
Bentham, Jeremy, 208, 237*.; at- 
tacks higher law, 335, 336, 344 
Berle, A. A., Jr., 13 
Herman, Edward, 188*. 
Big Business: Its Growth and Place 

(Twentieth Century Fund, Inc.), 


Bill of Rights, 47, 251, 257 
Binkley, Robert C., 147*. 
Bismarck, Prince von, 133 
Blackstone, Sir William, 344$ quoted, 

274, 276 
Boer War, 149 

Brave New World (Huxley), 59*. 
Briand, Aristide, his ideas of public 

policy, 151 
Brutzkus, Boris, 94*.; on failure pf 

Marxism in Russia, 86 
Buddha, Gautama, doctrine of, 376, 

Bureaucracy, phenomenon of, 36, 

Burke, Edmund, 228; quoted, -28, 

159, 253, 268} on state "direc- 
tion," 271, 272 
Business, big, inconsistent with free 

economy, 216-218 
Butler, Nicholas Murray, quoted, 13 



CANADA, achieve! federal union, 132; 
and the United States, 322, 323 

Capital, becomes protectionist, 47; 
under new economy, 169-173; 
allocation of, 174-176; mobility 
of, 214-216; its need of security, 

Capitalism, great corporate, not con* 
sequence of machinery, 14, 15 

Carlyle, Thomas, 202 

Carrel, Dr. Alexis, 34 

Carritt, E. F., 381 

Carver, Thomas N., quoted, 12S 

Cavour, Count di, 133 

Charles I, of England, 341, 342 

Charters. See Corporations 

Chase, Stuart, 97, 315., 387; 
quoted, 56, 93, 385; his "overhead 
planning," 4, 49, 52, 92; his 
belief in personal self-determina- 
tion, 49- S 1 ; his alternating views, 

Chatham, Lord, monument to, 159 

Clark, Grover, 147. 

Clark, John Bates, 228*. 

Class warfare, in Europe, 141-143; 
under fascism, 144-146 

Clemenceau, Georges, 148 

Coercive direction. See Authoritar- 
ian principle 

Coke, Sir Edward, 233, 237*.,- and 

James I, 246, 303, 338-341, 344, 

346, 347; his Comfleate Cofy 

holier* 350, 351 

Colbert, Jean Baptiste, reglements of, 


Cole, O. D. H., 184. 
Collective security, failure to pro- 
vide, 150-154 

Collectivism, premises of authoritar- 
ian, 4; reactionary tendencies of, 
16-19, 205, 206; begins to domi- 
nate western thought, 46, 47; pos- 
sibly at its climax, 48; goal of, 
51-53; fascist version of, 57, 58; 
bask assumption of, 66, 67; essen- 

tially military, 67, .87-90; a war 
economy, 89-93; theory of grad- 
ual, 107-110, 173; its concessions 
to pressure groups, 110-119; re- 
ducing wealth of nations, 119- 
127; in "Have-Not" nations, 131, 
132; makes for separation, 137 
146; counter-revolution of, 168 
173; versus liberalism, 173-176, 
206, 207; its reforms a mistaken 
remedy, 234; irreligious, 382, 
383; disaster of its triumph, 388. 
See also Collectivists 
Collectivism Economic Planning (von 

Hayek), 94*. 

Collectivists, fail to interpret indus- 
trial revolution, 15-19; seek to 
contrive glorious destiny, 22, 23; 
their authoritarianism, 54-57; 
their zest for progress, 204; turn 
to the state, 271. See also Col- 

Columbus, Christopher, 320 
Commentaries (Blackstone), quoted, 

274, 276 

Commons, John R., 243*., 350, 351 
Common-wealth of England (Smith), 


Communism, apologists for, 49, 50; 
goal of, 51; elaborated at leisure, 
57; doctrinaire theory of, 66-77; 
promise of, 75, 76; working theory 
of, 78-83; ambition to rule under, 
82, 83; planned economy of Rus- 
sian, 84-88; Mumford's "bask," 
96, 97; similar to fascism, 145; 
movement of the left, 168; out- 
lawed in Russia, 205*. Sea also 

Communist Manifesto-, 68 
Communists, their belief in coercive 
direction, 3, 4; national collectiv- 
ism of, 16. See also Communism 
Comfleate Cofy holder. (Coke), 

quoted, 350, 351 
Confucius, quoted, 377 



Congress, U.S., and the tariff, 114; 

powers granted to, 136; formation 

of, 254, 255 
Conservation, of natural resources, 

Constitution, U.S., powers granted by, 

136; formation of, 248-256, 317, 

318; dogmatic inhibitions of, 257- 

Constitutional Convention, forms the 

Constitution, 248-256, '317, 318 
Consumption, rationing of, 96-105 
Contract, importance of legal, 241 


Corn Laws, repealed, 45 
Corporations, control of, 216218; 

charters for, 277-281; and public 

agencies, 305-307 
Crimean War, 147, 149 
Cromer, Lord, 320 
Cromwell, Oliver, 167, 237n. 
Cushman, Robert ., 258*. 

D AN UBI AN EMPIRE, established, 132 
Darnel's Case, 341, 342 
Darwin, Emma, quoted, 366 
Das Kafital (Marx), 57*., 381*. 
Davy, Sir Humphry, 239 
Declaration of Independence, 135 
Deflation, cause of, 219 
Democracy, changing conception of, 
47; planning versus, 103, 104; 
essence of, 108, 109; pressure 
groups under, 116; American, 
260-268; government by com- 
mon law, 266-268 
Democratic Party, advocate of cen- 
tralized nationalism, 261 
Denikin, Gen., 87 
Descartes, Ren6, 370, 375 
Descent of Man (Darwin), 366 
Despotism, no novelty, 4, 5. See 

alto Fascism 

Dicey, A. V., 46*., 106*. 
Diocletian, authoritative regulation 
under, 11 

Distribution of Wealth (Clark), 


Dogma of the age, dominant, 3-6 
Dole, no remedy for poverty, 227, 

"Due Process of Law" (Cushman), 

Duguit, Leon, quoted, 264 


Eastman, Max, 197*. 

Economic Freedom (Hirst), 45 

Economic Planning in Soviet Russia 
(Brutzkus), 94*. 

Economy, politically administered, 9; 
disintegrating, 18; principles of 
new, 169-173; fallacy of classical, 
195-202; exchange, 223, 241, 
242; regulated through many 
markets, 300, 301; unsystematic, 
362. See also Planned Economy 

Economy of Abundance (Chase), 
315*.,- quoted, 4, 49, 50, 52, 
92, 93, 385 

Education, American passion for, 262, 

Elizabeth, Queen, expansion of com- 
merce under, 233 

Emancipation, promotes political un- 
ion, 140, 141 

Encyclopedia of the Social Sciences^ 
84*., 184*., 188*., 242*., 258*. 

"End of Socialism in Russia" (East- 
man) , 1 97*. 

Engels, Friedrich, quoted, 50*., 67- 
69, 181; defines socialism, 55*. 

England, progressivism in, 5; liberal- 
ism in, 45, 46; could not give 
birth to communism, 84; using 
collectivist measures, 106; forma- 
tion of the Commonwealth, 132, 
134, 137; challenged by German 
Navy Law, 146, 147; in World 
War, 148, 160; formative period 
of liberalism in, 246, 247; prop- 
erty laws of, 269; legislature and 



judiciary in, 288; imperialism of, 
320; a "Have-Not," 322; Crown 
vs. Parliament in, 340-342, 348- 
350. See also Law 
Entrepreneur!, displace feudal nobil- 
ity, 69 

Equality, impossibility of total, 76-8 1 
Essay on Liberty (Mill), 3S2 
Essays Moral, Political, and Literary 

(Hume), quoted, 194 
Europe, atomization of, 18; na- 
tionalism in, 132, 133; total and 
limited wars of, 147-149 
Evolution of Modem Capitalism 
(Hobson), quoted, 162-164 


Fascism, apologists for, 49, 50; 
Mussolini's conception of, 51, 55, 
59; its version of collectivist prin- 
ciple, 57, 58; an interesting ex- 
periment, 59, 60; the paradoz of, 
60-63; reality of, 63-66; similar 
to communism, 145; movement of 
the right, 168. See also Fascists 

Fascism and National Socialism 
(Florinsky), quoted, 55, 65 

Fascist; His State and His Mind 
(Ashton), 57*. 

Fascists, their belief in coercive direc- 
tion, 3, 4; national collectivism of, 
16; become anti-Marxist, 144, 
145. Sea also Fascism 

Five-Year Plans, 73, 77, 108, 179; 
primary objective of, 88, 89 

FletcAer v. Peck, 257 

Florinsky, Michael T., quoted, 55, 

Foch, Ferdinand, 148 

Ford, Henry, 36, 197*. 

France, nationalism in, 134, 137; 
power of the people in, 249; 
property laws of, 269 

Freedom, reaction against, 387-389 

"Freedom of Contract" (Hamilton), 
258ft.* qrt*ed, 259*. 

GALILEO, and the Inquisitors, 353- 
357, 359-361 

Gary, Judge, 217 

Gasset, Jose Ortega y, 249*. 

Geddes, Patrick, 8 

General Motors Corporation, 14, 

General Theory of Employment, 
Interest and Money (Keynes), 
111, 229; quoted, 45, 196 

Geoffrey Chaucer (Lowes),/ 29 

George III, 136 

George, Henry, 46*. 

German Navy Law, 146 

Germany, despotism in, 5; persecu- 
tions in, 49; its absolutism estab- 
lished, 51, 53; the fascist experi- 
ment in, 5863; dependent on 
outer world, 64; could not give 
birth to communism, 84; supply 
and demand in, 98; plebiscites of, 
103*.; becomes united, 132, 134, 
137; class struggle in, 141-143; 
its Navy Law, 146; impaired by 
War, 160; primitive tyranny of, 

Gierke, Otto, 190*., 269*., 304*., 
309*.; quoted, 264*., 310, 378 

Gladstone, William E., 358; estab- 
lishes free-trade system, 45 

Government, and control of economic 
activity, 4-6; power in, 23; its 
faculties not commensurate with its 
origins, 24-29; limited by gov- 
ernors, 40; an irrational, 105; and 
wealth, 127-129; American con- 
tribution to science of, 248; form 
of American, 254, 255; by the 
people, 263-268; suited to human 
capacity, 294-297; by command 
from above, 313, 314. See also 

"Government by Law" (McIIwiin), 
318*., 333 

Gradualists! national collectivism of, 



Great Britain. See England 

Great Depression (Robbing), quoted, 
119, 120 

Great Illusion (Angell), 161*. 

Great Society, formation of, 161; 
- its rise and fall in Roman world, 
162, 233; in England, 162, 163; 
and cultural lag, 166-168; its 
possibility seen, 194; no permanent 
empire in, 320; interdependence 
of, 325; has no architectural de- 
sign, 364; practicable ideal of 
government in, 367; the lost 
polestar to, 370-372; ultimate is- 
sue of, 372-37 S; Golden Rule of, 
376-378; foundations of, 378 

Great Society (Wallas), 1610* 192*. 

Green Laurels (Peattie), 366*. 

Grotius, Hugo, 233, 237*., 246, 
336, 337 

HABEAS CORPUS, vindication of, 341, 


Habeas Corpus Act (1679), 342 
Halm, Georg, 94*. 
Hamilton, Alexander, 133, 261 
Hamilton, Walton H., 258*.; 

quoted, 259*. 
Hawley-Smoot Bill, 113 
Hayek, F. A. von, 94*., 170*. 
Heckschcr, Eli F., 9*.; quoted, 10, 


Hegel, G. W. F., quoted, 381 
Henderson, L. J., quoted, 32 
Heir Eugen Duhring* Revolution 

in Science (Engels), quoted, 67, 

68, 69*., 181 
Herring, E. Pendleton, quoted, 

285*., 300 

Hertzler, Joyce O., 376, 377 
High-Level Consumption (Lough), 

Hirst, Francis W., 45*., 344; quoted, 

341, 342, 344 
History of freedom ant Other 

Essays (Acton), quoted, 369 

History of the Economic Institution* 
of Modern Eurofe (Nussbaum), 
162*., 169*. 

Hitler, Adolf, 58, 60, 61, 92, 107, 
256, 381; quoted, 56, 150*.; 
explanation of his policies, 63-66; 
a national collectivism 140; his 
eulogy of war, 159, 160; his 
conception of sovereignty, 310*. 

Hobbes, Thomas, 310, 370; quoted, 

Hobson, John A., 220*., 321*.; 
quoted, 162-164 

Holism and Evolution (Smuts), 
quoted, 388, 389 

Holmes, Oliver Wendell, and Four- 
teenth Amendment, 257 

Hoosac Mills Case, 120 

Hoover, Herbert, report of his Re* 
search Committee, 99*.; and 
American tariff, 113 

Hume, David, quoted, 194 

Humility, the guardian of sanity, 25 

Huxley, Aldons, 59*. 

292*;, 332 

Imperialism, two contradicting move- 
ments, 319-321 

Imperialism (Hobson), 321*. 

Incomes, proportionate, in Russia, 
197; distribution of, 225; un- 
earned, 226-228; inequality of, 
in United States, 231 

Industrial revolution, 9-11; insti- 
tutes life on large scale, 165, 166; 
a real revolution, 167, 168; law 
of, 205; social readjustment re-, 
quired by, 225; liberalism the 
philosophy of, 237-240 

Industrial System (Hobson), 220*. 

Industry, the advancing mechaniza- 
tion of, 7-9, 11, 12; and Trench 
r&glements, 9-1 1 ; concentration 
of control in, 13-17; new technic 
of, 177. See&Q Labor 



Inflation, artificial purchasing power 
of, 219 

Insurance, locial, 223, 224 * 

Interest, low rate of, 229 

Investment!, and savings, 218, 219, 
229; public, 226-228 

Italian Encyclopedia, 59*. 

Italy, despotism in, 5; deportations 
of, 49; its absolutism established, 
51, S3; its version of fascism, 59; 
dependent on outer world, 64; 
"battle of wheat," 95; supply and 
demand in, 98; plebiscites of, 
103*.; the Corporative State, 118; 
becomes united, 132, 134, 137; 
class struggle in, 141-143; primi- 
tive tyranny of, 238 


James I, of England, and Coke, 246, 

303, 338-341, 344, 346, 347 
James, William, 198 
Jefferson, Thomas, championed by 

Republicans, 261 
Johnson, Gen. Hugh S., 10 
Judiciary, and legislature, 286-288. 

See also Law 
Justice, high purpose of, 295-297 

KELLOGG, FRANK B., his ideas of 

public policy, 151 

Kellogg-Briand Pact, illusion of, 151 
Kerr Tobacco Act, 123 
Keynes, J. M., Ill, 229; quoted, 

45, 196 
Kings, divine right of, 7. See also* 


Kolchak, Gen., 87 
Kornilov, Gen., 87 

LABOR, becomes protectionist, 47; 
conscription of, 102, 103; legisla- 
tion for, 116; increasing division 
of, f64, 165, 192-194; under 
new economy, 169-173; alloca- 
tion of, 174-176. S** die In- 
dustry; Liberalism 

Laissez-faire, reaction against, 48; 
fallacy of, 184-192, 203; liberal- 
ism far removed from, 218; and 
individualism, 269 

Laski, Harold J., 237*., 321*.,- 
quoted, 70*., 314 

Latter-day liberals, share error of 
Marx, 181, 182; defined, 182*.; 
fallacy of, 195, 204; mired in 
status quo, 207, 208; fail to under- 
stand legal rights, 244-246, 259, 
260, 271; and private property, 
274. / See also Liberalism 

Law, need of social control by com- 
mon, 35; system of capitalist, 187, 
188; changes in, 188, 189; its 
dependence on state, 190; need 
for renovation of corporate, 218; 
English common, 263, 338-341, 
344; in a democracy, 266-268; 
social control by, 268-273; and 
regulation of property, 273-281; 
enforcement of, 289-294; official- 
dom under, 297-302; peace by 
uniform, 3 15-3 24 j conception of 
a higher, 334-338 j examples of 
higher, 338-351; substance of 
higher, 346, 347. See also Nat* 
ural law 

Law and Public Opinion in England 
(Dicey), 46*., 106*. 

Law in the Modern State (Duguit), 
quoted, 264 

Lawrence, D. H., 212*. 

Lawrence, Col. T. E., 35 

League of Nations, collective security 
and, 150-153 

Legal Foundations of Capitalism 
(Commons), 243*., 350, 351 

Legislature, and judiciary, 285- 
288; must delegate power, 301, 

Lenin, Nikolay, 92, 217, 381; 
quoted, 50*., 68*., 85; an ortho- 
dox ^Marxist, 85; his war com- 
munism, 86, 87; an effective 



leader, 93; his misconceptions, 
178, 179; retreat of, 205., 206 

Leviathan (Hobbes), quoted, 252 

Liberalism, versus collectivism, 173- 
176; becomes decadent, 183, 184; 
cardinal fallacies of, 184-192; 
based on true principle, 192; un- 
finished mission of, 194; frozen 
in its own errors, 203-205; rea- 
sons for debacle of, 205-210; its 
renascence assured, 210; far re- 
moved from laissez-faire, 218; 
concerned with new existence for 
man, 233; disturbing of vested 
rights, 234, 236-238; an insight 
into industrial revolution, 239, 

240; credit economy of, 241-243; 
and natural and legal rights, 243- 
246; its formative period in Eng- 
land, 246, 247; versus authoritar- 
ianism, 289-294; unsolved prob- 
lems of, 311; logic of, 342, 343; 
not substantive principle of good 
life, 354-356; promise of, 367, 
368; definitions of, 381. See 
also Latter-day liberals 

Liberals, their belief in coercive 
direction, 4; prejudiced against 
excessive government enterprises, 
299. See also Latter-day liberals 

Liberty, only beginning, 352, 353; 
desire for, 353-361 

Liberty and Tyranny (Hirst), 
quoted, 341, 342, 344 

Liddell Hart, B. H., 36*. 

Liloe, Henry, 341 

Lippmann, Walter, 192#., 251., 
253*., 294*., 319*. 

Locke, John, 233 

Long, Huey, 264 

Lough, William H., 98 ' 

Louis XIV, 9-11, 22, 332 

Lowes, J. L., 29n. 

MACHINES. See Technology 
Mcllwain, C. H., 318*., 333 

Madison, James, wishes to "refine" 
will of people, 250; his study of 
classical demagogues, 256; cham- 
pioned by Republicans, 261 

Magellan, Fernando, 320 

Magnitogorsk-Kuznetsk Combine, 95 

Maitland, F. W., quoted, 309 

Man, the mark of his mortality, 28; 
unable to understand social exist- 
ence, 29-32; the inviolable, 376-* 
378; degradation of, 378-383 

Man versus the State (Spencer), 
quoted, 52, 53 

Markets, in the new economy, 169- 
173; under liberalism and col- 
lectivism, 174-176; need of im- 
proved, 220-222; of modern econ- 
omy, 300, 301 

Marshall, John, 261 ; in Fletcher v. 
Peck, 257 

Marx, Karl, 51, 57*., 58, 217; de- 
fines socialism, 55*., 67-75; his 
theory fails to explain Russian re- 
gime, 8487; an effective leader, 
93$ defines "modern state," 113, 
114; not great teacher of col- 
lectivism, 128; failure of his for- 
mula, 1 42, 1 44 ; compared to Smith, 
1 77-1 8 1 ; his misunderstanding 
of inexorable laws, 206 ; his defini- 
tion of liberalism, 381 

Marxism. See Marx, Karl 

Means, Dr. G. C., 13 

Mein Kamff (Hitler), quoted, 65, 

"Menagerie, The" (Moody), quoted, 

Mercantilism (Heckscher), 9-11 

Mill, John Stuart, 352; foresees 
progress of collectivism, 46; on 
laissez-faire, 186 

Mind and Society (Pareto), quoted, 
34, 335, 336 

Mises, Ludwig von, quoted, 70, 94 

Modern Corporation and Private 
Proferty (Berk and Means), 13*. 



y! of modern society, 219, 220 
Monopoly, development of the,' 14; 
promoted by authoritarianism, 141 ; 
aggression of, 175; law and, 222, 
223 " 
Moody, William Vaughn, quoted, 


Morals and Politics (Carritt), 381 
Mumford, Lewis, 9, 11; quoted, 8; 
his "baric communism," 96, 97, 

Murphy, John, 31 
Mussolini, Benito, 58, 92, 381; on 
fascist conception, 51, 55, 59; and 
collectivist ideal, 56; explanation 
of his policies, 63-66; a national 
collectivist, 140; his eulogy of 
war, 159; his conception of sov- 
ereignty, 31 Off. 


Napoleon Bonaparte, *1 49 

Napoleonic Wars, 149 

National socialism, rise of, 139, 140. 
See also Germany 

National Socialists, German, views of, 

Nationalism, the older, 132, 133; 
new philosophy of, 133-137; of 
Democrats, 261 

Nationalists, their belief in coercive 
direction, 3, 4 

Natural law, long debate about, 6. 
See also LAW 

Natural Law and the Theory of So- 
ciety (Gierke), 190*., 26?*., 378 

Nazi philosophy. See Fascism 

New Atlantis (Bacon), 343 

New Deal, 25, 118*., 330; col- 
lectivism under, 123, 124, 139 

New Refublicy quoted, 538*. 

Nietzsche, F. W., his definition of 
liberalism, 381 

"Nigger Question" (Carlyle), 202 

NIRA, and the tariff, 117; and col- 
lectivism, 123 

Nuasbaum, Frederick L., 162*., 


Officials, function of, 282-288; un- 
der law, 297-300; regulation of, 
300-302; under liberalism, 304 

Of en Door at Home (Beard), 3 1 5*.,- 
quoted, 109, 110, 139 

PARETO, VILFREDO, quoted, 34; an 
inveterate liberal, 58; attacks 
higher law, 335, 336 

Par etc? s General Sociology (Hender- 
son), quoted, 32 

Pascal, Blaise, 370 

Peace, by uniform law, 315324 

Peattie, Donald Culross, 366*. 

Peel, Sir Robert, his liberal philoso- 
phy, 45 

Pericles, and Roosevelt, 26, 27 

Per flexed Philosopher (George), 

Phantom Public (Lippmann), 253*., 

Philippines, independence for, 138*. 

PhUosofhie des Rechts (Hegel), 
quoted, 381 

Philosophy, ascendancy of a liberal, 
45, 46; wistf ulness of immature, 

Pierson, N. G., 94*. 

Pitt, William, 45 

Place in the Sun (Clark), 147*. 

Planned economy, working princi- 
ples of Russian, 84-88; associated 
with scarcity and war, 89, 90; in 
time of peace, 91-105; democ- 
racy and, 108, 109. See also 

Planned Society (Soule), 49*., 315*., 
quoted, 17, 56, 91-93 

Plato, 74; his vision to Be realized, 
22; his Refublic, 365, 366 

Polanyi, M., quoted, 78, 79 

Political Theories of the Middle Age 



(Gierke), 304*., 309*.; quoted, 
264*., 310 

Politics, authoritarian principle in, 

Politics (Arietotle), quoted, 384, 385 

Popular Law-making (Stimaon), 
quoted, 266*., 286, 348 

Pound, Roscoe, 287*., 338, 347*.; 
quoted, 242, 243, 246, 2S7, 258 

Power, struggle for, 130; centraliza- 
tion of, 313-315; lawless con- 
tenders for, 329-334 

Preface to Morals (Lippmann), 
192*., 251*. 

Pressure groups, polity of, 110-116; 
vicious paradox of, 116-119; de- 
fensive and aggressive, 235 

Primitive Man (Murphy), 31 

Principles of National Economy 
(Carver), quoted, 125 

Principles of Political Economy 
(Mill), 186*. 

Privilege, special. See Collectivism 

Production, large-scale, 14, 15; 
Marxian theory of, 70, 71; dif- 
ficulty of planning, 96-105; can-, 
not be revolutionized, 209, 210. 
See also Industrial revolution; 

Profits, regulation of, 216 

Progress, through liberation of en- 
ergy, 19, 20 

Progressives, their belief in coercive 
direction, 3, 4; the mark of, 5 

Progressivism, true and counterfeit, 

Proletarian Revolution^ quoted, 50*. 

Property, title to, 269-273 ; regula- 
tion of, 273-281 

Protectionist doctrine, grows in popu- 
larity, 46, 47; tariffs and, 113, 

Providential State, cult of, 6; plans 
for future, 22, 23; belief in, 70, 
71. See also State 

Public Administration and the Public 

Interest (Herring), quoted, 285*,, 

Public agencies, and corporations, 


Public Opinion (Lippmann), 192*. 
Public works, control of, 302, 303 
John, 237*. 

RADEK, KARL, 238*. 

Rationing, of consumption, 96-105 

Readings on the History, and System 

of the Common Law (Pound and 

Plucknett), 338*.; quoted, 246 
Realism and Nationalism (Bintiey), 


Recent Social Trends, 99*. 
Rfcglements, of Colbert, 9-12 
Republic (Plato), 365, 366 
Republican Party, in 1936, 261; 

its corporate collectivism, 330 
Revolt of the Masses (Gasset), 249*. 
Rhodes, Cecil, 320 
Ricardo, David, 111*.; fallacy of 

his economics, 195-199, 202 
Richelieu, Cardinal, quoted, 369, 

370, 375 

Right, Petition of, 342 
Rights, natural and legal, 243-246; 

conception of equal, 284, 289. 

See also Property 

Rights of Man, Declaration of, 310 
Rise of European Liberalism (Laski), 


Robbins, Lionel, quoted, 119, 120 
Roosevelt, Franklin D., and liberal 

conception of state, '8; compared 

to Pericles, 26, 27 
Root, Elihn, 320 
Rosenberg, Alfred, 381 
Rulers, Limitations of, 24-29. See 

also Government 
Russia, despotism in, 5, 67; Scale's 

view of, 50; its absolutism estab- 

lished, 51, 53; appearance of 

harmony in, 80; ruthless expro- 

priation of kulaks, 8! ; its planned 



economy, 34-88; civil war in, 
85-87$ Gotplan, 95; supply and 
demand in, 98; and equal privi- 
lege!, 118; nonaggression of, 145, 
146; not socialist experiment, 179; 
proportionate incomes in, 197; 
two retreats in, 205, 206; primi- 
tive tyranny of, 238, See also. 

SAVINGS, and" investments, 218, 219, 

Schacht, Dr. Hjalmar, his manage- 
ment of foreign trade, 95 

Science, universal faith in, 23, 24; 
of classical economists, 200, 202 

Science and the Modern World 
(Whitehead), quoted, 3 

Security, collective, failure to pro- 
vide, 150-154 

Selden, John, 233; and Darnel's 
Case, 341, 342, 344 

Shakespeare, William, quoted, 29 

Shelbume, Lord, 45 - 

Smith, Adam, 45, 48, 135*., 183, 
208, 233, 237., 335, 359; com- 
pared to Marx, 177-181 ; and new 
industrial system, 196, 202; on 
social services, 297, 298; believer 
in liberty, 380 % 

Smith, Sir Thomas, 351 

Smuts, Jan, quoted, 388, 389 

Social Thought of the Ancient Civi- 
lizations (Hertzler), 376, 377 

Socialism, defined, 55*.; Marxian, 
67-75; crucial point in argu- 
ment for, 72, 73; privilege of 
ruling ineradicable under, 81, 82; 
becomes national, 139, 140; masses 
lose faith in, 142, 143. See also 
National socialism 

Socialism (von Mises), quoted, 70, 

Socialists, their belief in coercive 
direction, 3, 4. See also Social- 

Social control, appropriate for self- 
governing people, 264266; be- 
longs to maturity, 266-268,; by 
law, 268-273; and regulation of 
property, 273-281; in liberal or- 
der, 289-294; suited to human 
capacity, 294-297; by defining 
reciprocal rights, 311, 312, 325; 
dilemmas of, 313, 314; through 
law, 316 * 

Social process, beyond man's compre- 
hension, 29-32 

Social services, need of, 226-228, 
297, 298; control of, 303 

Social Statics (Spencer), 182., 187, 

Society, analytical problem of, 33, 
34; the sickness of an over- 
governed, 37-40; paramount con- 
cern of enlightened, 210-212; 
field of reform in, 212-232; civil, 
318-325; liberal conception of, 
358; designing a new, 362-368. 
See also Great Society 

Sorel, Georges, 243 , 

Soule, George, 49*., 97, 315*.,- 
quoted, 11, 17, 56, 91-93; a 
sheltered revolutionist, 50-52 

Soviets. See Communism; Russia 

Spanish-American War, 149 

Spencer, Herbert, his views on so- 
cial reform, 46; prediction of, 
52, 53; a latter-day liberal, 182; 
his views of law, 186-188; later 
teachings of, 208, 239, 240; and 

' Fourteenth Amendment, 257; de- 
nounces public health measures, 

Spinoza, Baruch, 370 

Sfirit of the Common Law (Pound), 
287., 338, 347*. , quoted, 242, 

i 243, 246, 257, 258 

Stakes of Diplomacy (Lippmann), 

Stalin, Joseph, 8J, 92, 178, 330, 
381; a national collectivism 140; 



retreat of, 2050., 206; rebellion 
of Trotzky against, 315*. 

State, the, increasing ascendancy of, 
4-6; and control of machine 
technology, 7-12; elaborate ap- 
paratus of, 18, 19; limitations of 
its rulers, 24-29; and social con- 
flict, 141-146; constitution of a 
free, 267; rights exercised by, 
269-281; perversions of 'liberal, 
288; justice in the, 295-297; 
collective agencies of, 305-308; 
associations of, 308-310; collective 
action in liberal, 307; protector 
of equal rights, 367. See also 
Government; Providential State; 
Totalitarian state 

Staff and Revolution (Lenin), quoted, 
50*., 68*., 85 

State in Theory and Practice (Laski), 
321*.,- quoted, 70*., 314 

Status quo, latter-day liberals and, 
207, 208; reform of, 236 

Stimson, Frederic Jesup, quoted, 
266*., 286, 348 

Stoics, challenge human slavery, 334, 
337, 377, 378 

Struggle for Law (von Ihering), 
290*., 292*., 332 

Supreme Court, U.S., and New Deal, 
120, 123; in Trenton Potteries 
Case, 126; its "due process" de- 
cisions, 208, 239; authority pf, 
293, 294 

TARIFF, tfre Hawley-Smoot, 113, 
114; and special privilege, 116- 
118; authoritarian principle, 138; 
in United States, 138, 139; en- 
ergy of, 172 

Taxation, under New Deal, 124; 
just system of, 227, 228 

Technic, industrial. See Industry 

Technic, machine. See Technol- 

Technic, political* See Politics 

Technics and Civilization (Mom- 
ford), quoted, 8, 96* 97 

Technology, new machine, 7-9, 11, 
12; and coercive direction^ 13- 
16; large-scale production in, 14; 
laws adapted to modern, 15; its 
future not predictable, 16; the- 
ory of a new, 69-71. See also 
Production x 

Title deeds, and socialist argument, 

Tolls, on the Rhine, 129 

Total war, revival of, 146-149; in* 
ternational security and, 150 
155; not justiciable, 155. See 
also War 

Totalitarian state, jurisdiction of, 
4; the goal of collectivism, 5 1- 
53; absolutism of, 5457; moves 
toward isolation, 140. See also 

Townsend Plan, 130 

"Trend of Economic Thinking" 
(von Hayek), 170*. 

Trenton Potteries Case, 126 

Trotzky, Leon, 83, 92, 330; hii 
rebellion against Stalin, 315*. 

TVA, 121*. 

Tyranny, foundations of, 383387 

UNITED STATES, progressivism in, 5; 
regional and occupational barriers 
in, 18; pork barrels in, 79, 80; 
could not give birth to commu- 
nism, 84; production in, 98-105; 
using collectivist measures, 106; 
Union preserved, 132, 134; na- 
tional tariff of, 138, 139; re- 
jects League, 153; restricts im- 
ports, 154; inequality of income 
in, 231; considers problem of 
constitutional government, 247- 
266; legislature and judiciary in, 
288; and Canada, 322, 323.; at- 
titude to English common law in, 
344, 345 



17. 5. S. R. Economics (Polanyi), 

quoted, 78, 79 
U. S. Steel Corporation, 14/217, 309 



Wallace, Henry A., 10 

Wallas, Graham, 161*., 192*. 

War, road to, 131, 132; outlawed 
by modern conscience, 159-161; 
authoritarianism suited to, 290, 
291. See also Collectivism; Total 

Washington, George, tradition of, 
133, 134 

We or They (Armstrong), 319*. 

Wealth, restriction of, 119-127; 
expectations of, 127129; aug- 
mented by division of labor, 192- 
194; proportional distribution of, 
1 96-1 98 ; maldistribution of, 

Wealth of Nations (Smith), 45, 48, 
135*., 183, 233, 335; quoted, 
196, 297, 298, 359 

Weber, Max, 94*. 

Western world, and increasing as- 
cendancy of the state, 4-6; pro- 
gressive spirit of, 21; 'change in 
its intellectual climate, 46, 47; 
begins to doubt value of collec- 
tivism, 48, 49; free trade in, 

Whitehead, Alfred North, quoted, 
3, 30, 333, 377 

Why Should We Change Our 
Form of Government? (Butler), 
quoted, 1 3 

William the Conqueror, 348 

Wilson, Woodrow, ideology of, 87; 
his ideas of public policy, 151 

Works (Burke), 228, 253, 268 

World War, culmination of national 
rivalry, 20, 21; a catastrophic 
unsettlement, 23, 64; collapse of 
Hapsburgs and Romanoffs during, 
137; a total war, 148; devastation 
of, 160 

Wrangel, Gen., 87 

YUDENICH, Gen., 87